The expansion of retail sales, the performance of the construction industry and the development of investments support expectations that the economy grew by more than 4 per cent in the last quarter of 2017, Minister for National Economy Mihály Varga said on Tuesday on the public service television news channel M1.

The Minister pointed out that the Hungarian economy now rests on stable foundations; not only industrial production, and in particular the vehicle industry, is the main driver of the economy as last year tourism performed extremely well, and so did the construction industry through investments and retail sales.

Mr Varga said the family housing benefit (csok) played an important role in the expansion of the construction industry. In connection with this benefit financial institutions accepted more than 63,000 applications. So far the state has provided grants worth HUF 177 billion for families agreeing to raise children and buying new homes in order to facilitate their housing projects, he added.

The Minister made mention of the wage agreement concluded in November 2016 which equally provided for tax reductions and pay rises. As a result of this agreement, the minimum wage and the guaranteed wage minimum of qualified workers increased significantly last year, while the social contribution tax was reduced from 27 per cent to 22 per cent in 2017, he said.

Mr Varga indicated that this trend will continue: the minimum wage and the guaranteed wage minimum of qualified workers will increase by 8 and 12 per cent respectively from 1 January this year, meaning that the former will increase to HUF 138,000, while the latter to HUF 180,500.

By Mr Varga’s account the preferential 5 per cent tax rate applicable to the sale of new homes will remain in force until 31 December 2019. If however the Government takes the view that this time limit needs to be extended, it will deal with this issue in the second half of the year, he underlined.

He said in answer to a question that press reports claiming that collective redundancies may be expected in the public sector after the elections are not true.

(Ministry of National Economy/MTI)