There is some slowing down, but there is no major decline, there is no recession yet, Finance Minister Mihály Varga said summing up the latest processes in the world economy and Hungary’s prospects in his address delivered at the closing plenary session of the 57th Itinerant Conference of Economists in Nyíregyháza.
Analysing external and internal risks, the Finance Minister concluded that the government’s measures play a major role in the strengthening of the Hungarian economy, and thanks to this, despite global impacts, we may continue to expect growth.
Evaluating the performance of the Hungarian economy in the first half of this year, Mr Varga said the ailing of the German economy is not yet affecting the Hungarian economy which shows that the country’s exposure to external risks has decreased. Internal engines accounted for 2.4 per cent of the 5.1 per cent GDP expansion in the first six months, government measures accounted for another 1.6 per cent, including the tax and wage agreement, promotional housing measures, state investments, the Programme for a More Competitive Hungary and the Economy Protection Action Plan, external demand was responsible for 0.9 per cent, while EU funds only accounted for a mere 0.2 per cent of the growth, the Minister pointed out.
He said it is also a good sign that the players of the Hungarian economy have considerable accumulated reserves, compared with the crisis in 2008. The household and corporate indebtedness rate is low, the Hungarian banking’s system shock resilience is satisfactory, the reserves of state finances are high, the percentage of the sovereign debt denominated in foreign currency and held by foreigners has decreased significantly, while the rate of employment has exceeded 70 per cent.
Mr Varga highlighted that while political uncertainty affecting the world economy is ever increasing, this indicates more a change in the current political atmosphere than the advent of a crisis. He said Hungary’s economic policy will have to avoid overspending and the exhaustion of reserves also in the future, it must continue to support investments, the exchange rate of the forint must remain predictable, we must mobilise available labour market reserves, and it is equally necessary to implement policy recommendations, to improve the competitiveness of the sector of small and medium-sized enterprises and to preserve political stability.
(Ministry of Finance/MTI)
