On Tuesday in Budapest, at a conference entitled Inspiring Hungary organised by the Hungarian Investment Promotion Agency (HIPA), the Finance Minister described Hungary’s economic growth as sustainable despite the slowing down of the global economy.

Mihály Varga highlighted that the performance of the German, Italian and British economies is deteriorating, and the prospects of Japan and the United States are likewise not convincing.

At the same time, within the European Union, Central and Eastern Europe’s economic growth rate is outstanding, he said. He observed that within this region the Hungarian economy is doing better and better; after this first quarter this year, also in the second quarter of 2019 there was a dynamic growth of 5.2 per cent. With this result, Hungary’s economic growth is almost four-fold the average of the Member States of the EU, Mr Varga pointed out.

Mr Varga stressed that governmental measures, family tax benefits, the rise in employment and an increase in retail consumption, which is also boosted by the country’s wage policy, equally contribute to the results and the ongoing growth.

Internal engines such as retail consumption and investments accounted for 2.4 per cent of the 5.1 per cent rise in GDP in the first half of the year, while government measures accounted for 1.6 per cent, including the tax and wage agreements, measures promoting housing, state investments, the programme For a More Competitive Hungary, and the economy protection action plan. External demand added 0.9 per cent to the Hungarian economy’s growth, and EU funds merely accounted for a 0.2 per cent contribution, the Minister listed.

He also pointed out that Hungary is an increasingly popular investment destination, and said it is a positive development that the players of the Hungarian economy have major reserves, compared with the 2018 crisis. Retail and corporate debts are low, the Hungarian banking system’s shock-absorbing capacity is robust, and real wages have steadily increased for more than six years in Hungary: In the past one year alone, there has been a seven-per cent increase. The situation of the budget is stable, the sovereign debt is continuously decreasing, the reserves of state finances are high, the foreign currency percentage of the sovereign debt as well as the percentage in foreign hands have decreased significantly, Mr Varga listed.

He also recalled that the country’s credit rating has improved, and the international credit rating agencies are beginning to recognise the country’s performance.

In the context of measures designed to support growth and to enhance competitiveness, the Finance Minister drew attention to the fact that from 1 January 2020 the tax of small businesses (kiva) will decrease by 1 percentage point, the VAT on hotel services will be reduced, certain taxes will be consolidated or scrapped, and they will provide VAT refunds for people living in small settlements for housing purposes.

(Ministry of Finance)