The Hungarian economy’s performance has been improving: the rate of economic growth hit 4.8 percent last year, the highest figure in the past fifteen years, Minister of Finance Mihály Varga said. As growth has been decelerating globally and in the entire European Union, the Government is working to maintain the current growth momentum.

The latest statistics also reflect the fact that Hungary’s economic upturn has been potent and sustainable. Following GDP growth of 4.1 percent in 2017, the pace of expansion has picked up more last year than most analysts had expected. In Q4 2018, GDP grew by 5 percent according to unadjusted data, which figure is three times higher than the EU average. It must be noted, the Minister said, that the current expansion of the Hungarian economy has not been fuelled by external loans as it used to be in the 2000s; it is taking place in a balanced macro-economic environment, and the government debt-to-GDP ratio has been declining.

The bulk of growth in the year 2018 has been generated by market services but growth has also been driven by the six-year tax- and wage agreement and the performance of the construction sector, which has been fuelled by the Government’s housing scheme. Thanks to tax reductions and wage hikes, the income of Hungarian families has been on the rise, underpinning consumption growth. The efficient absorption of EU funds and projects implemented by large enterprises have resulted in double-digit investment growth, the Minister pointed out. Although the rate of the export of goods was below that of imports, the growth rate in the export of services was robust due to favourable tourism and transport volumes, Mihály Varga said. Speaking of the future the Minister noted that real economic, inflation and foreign trade balance trends must be closely followed and potential barriers caused by labour shortages must be studied. As the global economy and our region are also facing economic uncertainties, the European Commission has cut its prior EU growth estimate by 0.6 percentage points to 1.3 percent for 2019. In order to maintain Hungary’s high growth rate and keep it at least 2 percent higher than the EU average also in the long term, the Government is contributing to the increase of competitiveness through a number of measures, and the Government is working on an economic action plan, he said.

(Ministry of Finance)