Minister of State for Financial Affairs Ágnes Hornung said that Hungary’s economic outlook was promising, stressing that GDP growth is expected to exceed 2 percent this year despite the lower volume of EU funding absorbed by the economy.

At a press conference held in Budapest, the Minister of State emphasised that economic growth was seen to be driven in coming years by consumption, market services and agricultural sector output. The industrial sector may be boosted by higher capacity utilization at car manufacturers following model changes, and the construction sector may see an upturn due to measures with a positive effect on the residential property market. The faster absorption of EU funds is also expected to add momentum to economic development projects, which is to bolster SMEs.

As a result, the latest estimate published by the Ministry for National Economy predicts GDP growth of 4.1 percent for next year and 4.3 percent for 2018.

This year’s experiences show that the largest obstacle to economic expansion in coming years may be the shortage of skilled labour, therefore efforts must be made to have properly paid people with adequate skills in highly productive jobs.

To this end, a six-year wage deal was concluded in November, which may bring European wages to Hungary and increase competitiveness, she noted.

Among the tasks to be resolved next year the Minister of State mentioned that a policy for improving people’s financial awareness must be elaborated, and the Government is to achieve more economic transparency through a revision of the anti-money-laundering law, of which a bill is to be submitted to the National Assembly in spring 2017. A revision of the effective regulation is also necessitated by EU requirements; the new regulation will be conform to international trends and have some tighter anti-money-laundering rules, she pointed out.

Among this year’s achievements of the Hungarian economy, Ágnes Hornung highlighted that the country’s credit rating has been upgraded to investment category by all three major credit rating agencies in 2016. The government debt-to-GDP ratio has continued to decline, and it may fall to 74 percent from the 74.7 percent figure registered one year ago – in compliance with criteria set by the Basic Law and the EU. The composition of Hungary’s government debt has also improved: the share and volume of forex debt held by non-residents have both declined significantly. Accordingly, domestic investors have gained more importance, as a result of the MNB’s self-financing scheme the share of banks of the government securities market has increased to 29 percent, and the share of government securities held by residents has risen to some 20 percent by September.

(Ministry for National Economy)