Stable and rapid economic growth shows that the economy policy based on wage hikes and tax cuts has been bearing fruits, and thus the standard of living of Hungarians has improved substantially, Minister for National Economy Mihály Varga said, commenting on the latest GDP flash report of 2017 released by the Hungarian Central Statistical Office (KSH).

In Q4 2017 and in the year 2017, the volume of GDP grew by 4.4 percent and 4.0 percent year-on-year, respectively. In his analysis of the data the Minister pointed out that in 2017 there were three working days less than in 2016, of which two were missed in the last quarter. GDP data which take these factors into account and are used for EU statistics show an even more favourable picture. According to these, GDP was up by 4.2 percent last year and by 4.8 percent in the last quarter. These figures are remarkable even from a historic perspective: these KSH data have been the best since 2005, he added.

One-fourth of last year’s growth, some 1 percentage point, has been the result of the economic stimulus generated by the six-year wage and tax agreement concluded in November 2016. Positive trends have also brought palpable benefits for Hungarian households, he stated.  Owing to the 12.8 percent wage hike and 70 thousand new jobs, employees earned some HUF 1 100bn more in 2017 than the year before, and this has boosted the standard of living, Mihály Varga noted.

The growth of the Hungarian economy has been stable, sustainable and broadly based. The latter presumption is proven by the fact that with the exception of the agricultural sector, which has suffered from adverse weather conditions in 2017, every economic branch has contributed positively to overall growth. Taking a look at stability and sustainability shows that balance indicators have also been sound: growth has not been driven by borrowing and more debt. On the contrary: the general government budget deficit was low -- some 2 percent -- last year, and this has also caused the general government debt-to-GDP ratio to edge lower, he stressed.

From an international perspective, the expansion of the Hungarian economy continues to significantly exceed the growth rate of the EU: the latest flash report of the Eurostat shows that growth averaged 2.6 percent in the EU28 last year.

In 2017, the speed of economic convergence has gained momentum. In terms of data from the Visegrad Four, the European Commission is predicting remarkable performance as far as full-year growth is concerned, while Hungary is seen on top of the ranking when it comes to quarter-on-quarter data, the Minister said.

For this year, the Ministry for National Economy is expecting GDP growth of 4.3 percent. The recent wage and tax cut agreement as well as the reduction of corporate income tax to 9 percent will continue to have a stimulating effect on the economy, along with the strong performance of the construction sector, he emphasised.

(Ministry for National Economy)