In its winter economic forecast the European Commission acknowledged that the Hungarian economic model works - Minister of State for Government Communications András Giró-Szász said.

He recalled that the European Commission had repeatedly forecasted lower growth rates for Hungary, however, this year's figures prove that "the Hungarian economy is on a growth path for the long run".

According to the document, the Hungarian economy recorded 3.3% growth in 2014, becoming the second best in the EU after Ireland. The Minister of State also noted that last year the average growth in the EU member states was 1.3%.

Mr Giró-Szász pointed out that "in 2015-16, the Hungarian economy will continue to grow, and the growth figure for 2014-15 will again be well above the European average."

The forecast clearly proves, he continued, that employment in Hungary will further grow in the coming years, which means that the government will get closer to reaching full employment.  Furthermore, unemployment will keep the decreasing trend of the previous years, he noted, reminding of the fact that Hungary has succeeded in achieving the most significant decrease in unemployment rates in all Europe: according to official data the rate has fallen from 10.2 to 7.7 %. Moreover, in 2015 the rate may further be reduced to 6.6 %, he added.

The Minister of State underlined that according to the forecast, the sovereign debt of Hungary will be over 10% lower than the EU-average. He also added that "we should wait for the official data in the coming years as well, as it is not the first time that credit rating agencies and economic institutions have forecasted pessimistic figures”.

He noted that official data for 2014 on sovereign debt will only be published in mid-February, so it would be premature to envisage the end of the decreasing sovereign debt trend that has been on-going since 2010.

The continuously decreasing ratio of foreign exchange denominated debt was considered as a positive trend by the Minister of State, as this contributes to the further reduction of sovereign debt and country risks related to exchange rate changes. According to his briefing, at the end of 2010 the FX-ratio of the Hungarian sovereign debt was 47%, at the end of 2013 42% and “it will decrease further” by the end of 2015.

András Giró-Szász appreciated the fact that - according to the latest data from November 2014 - Hungarian households owned government bonds worth HUF 2286.7 billion as good news, and he also pointed out that this year, Hungarian FX-debt may further decrease. He also added that while this year, debt worth EUR 2.3 billion will mature, the Debt Management Agency will only issue new papers worth EUR 500 million, thus sovereign FX-debt might decrease by EUR 1.8 billion on a year-on-year basis by the end of 2015.

The Minister of State also mentioned that the investors’ trust in Hungary is unchanged, which is also reflected in the new minimum yields.

According to Mr Giró-Szász, the greatest achievement of the Hungarian economic policy is still the ability to keep the budget deficit below 3%. The deficit may decrease to 2.5% this year, which is a more favourable forecast than that of last year – he added.

According to his summary, every analysis, report and economic indicator underpins the fact that Hungary is heading in the right direction, and after the report of the European Commission it can be reiterated that sooner or later every economic and credit rating institution will have to acknowledge the success of the Hungarian economic model.

The Minister of State added that the government still has tasks to accomplish over the next 3-3.5 years. One of these is the further improvement of the situation of those, who earn their livings through work. In order to reach full employment, people have to receive job offers instead of grants – he said. He also underlined the importance of defending the achievements of utility price reductions. Referring to future tasks he added that the government will improve the recognition of public sector workers by various career models.

(Prime Minister's Office)