Following robust growth in the first three months of the year, the Hungarian economy grew by 3.2 percent in the second quarter. This figure is in line with prior expectations: this period saw the highest growth last year; therefore this quarter’s increase may appear modest and lower than it was in the previous quarter. In the second half of 2017, the Ministry for National Economy expects growth to pick up, driven by the accelerated payments of EU funding, the Housing Subsidy Programme, the six-year wage agreement and tax reductions.

The example of emerging countries capable of narrowing the economic gap with highly developed economies as well as global growth challenges show that the low-wage economic growth model prevalent in past years needs to be discontinued. In the period that followed the positive economic U-turn of 2013, the economic gap can be narrowed and higher competitiveness may be achieved through wage hikes and the increase of high-quality jobs at innovative enterprises.  Both the six-year wage agreement and tax reductions serve this end, and recent statistical data confirm the adequacy of this new growth model.

In the initial five months of 2017, wages grew by 12.1 percent year-on-year, and this double-digit growth accelerated market services growth. Construction sector output and favourable housing data were mainly the result of the faster absorption of EU funds and incentives of the Housing Subsidy Programme. These factors are seen to add even more momentum to economic growth in the second half of the year.

Economic expansion is seen to be sustainable, the country’s external financing capacity continues to be excellent, growth has not generated more state debt and thus Hungary’s external financial liabilities – unlike in the pre-crisis period -- diminishing.

In the second half of the year, growth will be underpinned by the disbursement of EU funds and housing subsidies, tax cuts and wage hikes. Accordingly, the Government’s GDP growth target of 4.1 percent is attainable for the year 2017

(Ministry for National Economy)