Economic experts are surely still influenced by the negative headlines that were once used to describe the economic policies of the Orbán administration. During the Government’s first years, articles were mainly about near-bankruptcy. Rarely did they give any positive examples. Today, the situation has changed entirely. Even if there aren’t multitudes of international articles that praise Hungary’s economic performance, the figures speak for themselves. Hungary’s GDP is presently 15 % higher than when Orbán’s Government took over power six years ago.
According to the most recent GDP data, the Hungarian economy grew by 2.6 % in the second quarter, which significantly surpassed even the analysts’ forecasts of 2.2 %. It should also be noted that after the GDP results of the first quarter, which is mainly attributable to one-off items and ended up causing disappointment to many members of the government, the amount of EU funds provided in the second quarter was also less than expected. However, as we will soon see, that is not the only thing driving the economic motor. This result is exceptional on an EU level as well (the second highest), and almost all economic sectors have contributed. In light of the encouraging signs, the nation’s performance can be considered maintainable, which puts the government’s target of 2.5 % growth within reach.
This turnaround that leads to a stable economic growth of about 3 % is based on several factors. Industrial production is growing stronger, especially in vehicle production and the related segments. Significant growth is also experienced in the service sector, which is one of the results of the increase in real wages. The strong increase in disposable income and near-zero inflation have a beneficial effect on demand, which is apparent in both the retail and the tourism sectors. The drop in the unemployment rate and the increased level of employment has led to public consumption becoming an increasingly important factor. Last but not least, the export performance of domestic companies has led to a further increase in Hungary’s foreign trade balance, which contributes to stimulating economic growth through net exports.
In summary, it can be established that after many difficult years, Hungary is once again on the path of stable growth. It is very important to maintain our momentum: an economic recovery plan has to be developed that ensures GDP growth levels of 3-5 % can be sustained. Thanks to these real economy processes, the state of the general government sector is becoming increasingly stable. This strengthens Hungary’s economic position by reducing deficit and state debt.
CÖF-CÖKA Legal Cabinet
