The Hungarian economy is poised to return to growth this year, with expectations that it could rank among the top in the EU for growth the following year, as highlighted by the Finance Minister in his speech in Budapest on Thursday.
Mihály Varga emphasized that after enduring four difficult years, the government anticipates a decrease in the deficit, lower public debt, and stronger economic growth. He stressed the importance of stability and equilibrium for the Hungarian economy to reclaim the sustained growth it experienced prior to the COVID epidemic.
Among the necessary conditions for this recovery, the Minister cited
increasing employment, reducing public debt and the deficit, maintaining low inflation, enhancing competitiveness, and continuing to attract capital to the country.
Mr. Varga recalled the setbacks inflicted by the coronavirus epidemic, the Russian-Ukrainian war, the energy crisis, and falling inflation on the economy’s performance. During this challenging period, the government prioritized preserving achievements, including family allowances and tax benefits, protecting jobs, and launching programs to support businesses.
The Finance Minister highlighted Hungary’s ability to stabilize its situation independently.
Consequently, the Hungarian economy rebounded faster than the EU average, reaching the 2019 output level as early as 2021.
He pointed out that the European Commission’s latest forecast predicts a 2.4 percent growth for the Hungarian economy this year, a figure he deems realistic. To ensure sustainable growth, the government has set a target of increasing the current employment rate from 75 percent to above 80 percent while keeping unemployment low. Mr. Varga stressed the difficulty of achieving sustainable growth with a large budget deficit, which is planned to decrease to 4.5 percent this year, 3.7 percent next year, and 2.9 percent in 2026.
The Minister also hailed significant achievements, such as reducing the rate of price inflation from 25.7 percent in January of the previous year to 3.8 percent,
achieving record-high foreign trade figures, improving the current account position, and maintaining a strong ability to attract capital. He noted that Hungary’s competitiveness benefits from a favorable tax system, which is income- and labor-friendly and ranks among the least taxed in comparison with other European countries.
Mr. Varga concluded by highlighting Hungary’s leading position in the EU tax reduction league table and its remarkable progress in whitening the economy in recent years.
