According to the latest statistics from Eurostat, the Hungarian economy has made great strides in the past few years, having overtaken Slovakia and Poland and approaching Portugal and Greece, economic journalist Csaba Szajlai writes in a column in conservative daily Magyar Nemzet.
And this news is not coming from the government itself, but from the Statistical Office of the European Union in Brussels. For those who may not be involved in economics, the most well-known development indicator, GDP per capita (calculated on the basis of purchasing power parity), for Hungary is already attractive and commendable. Hungary’s GDP per capita, i.e., the country’s annual economic performance, was 74 percent of the EU-27 average last year. But how did we get here?
By comparison, the Czechs are above 80 percent, while the Slovenes are above 90 percent of the Community average. Given that both Czechia and Slovenia have been doing quite well for decades, the most striking development is that of Hungary. Let’s take a quick look at some older statistics. In 2006, we achieved one-half of the EU’s level of economic development, and in 2012, two-thirds. The Hungarian explosion is clearly the result of the economic policy of the last decade, especially in recent years. So much so that from the point of view of Brussels, the economy is characterized by constant convergence, i.e., catching up.
Of course, if we also look at the economic production of other Central and Eastern European Union Member states, it is not just Hungary but the entire region that is growing. The development of the Baltic countries is above average; in particular, the economies of Estonia and Lithuania have been on a strong upward trend. Romania has also started to catch up in recent years, while Slovakia and Croatia have slowed down, to put it mildly.
During the time of the first Orbán government, in the early 2000s, the competition between Hungary and the Czech Republic in terms of economic development was pretty much head to head. We were at a broadly similar level of development, although the Czechs have been known to have the most developed economic potential — for centuries.
However, the positive trend in Hungary was interrupted after the change of government in 2002. Many people remember the first and then the second 100-day programs, the “completion of the welfare regime change,” which became what? In a nutshell: budget overruns and sky-high public debt. And despite having joined the European Union, the Hungarian economy did not show the positive effects of the additional resources available.
In fact, we became the textbook example of everything that could possibly go wrong: There was no sign of a crisis and EU funds were flooding in, but the economy did not perform accordingly and high public deficits diverted Hungary from its normal trajectory. In 2008, we had to live the shame of having to receive an IMF-EU-World Bank rescue package so that we could avoid bankruptcy. Let us not forget that we were the first EU member state to apply for international financial support, specifically for a loan. The development of the economy completely stalled: First, the Slovak and Estonian economies overtook us and then the Lithuanian as well. The Croats caught up with us, too, as did the Poles. What hurt the most, of course, was that Slovakia became — for a long time — the poster child we should emulate.
In other words, popping the champagne is now justified: Overtaking Slovakia last year was a spectacular result of an economically successful decade. It is true that the Hungarian GDP per capita is only a hair above Slovakia’s, but the performance must now truly be acknowledged. In addition to economic growth, success also required financial balance and a spectacular expansion of the labor market. As for everyday life, despite the economic shock caused by the coronavirus, our exports are holding up.
Of course, we Hungarians do not measure ourselves against the Slovaks, but rather the Austrians. When will we catch up to them? According to last year’s data, we were at 60 percent of the current level of economic development in Austria, while at the time of the regime change, we were at one-third. The fact that reaching that level was not a pipe dream also indicates that there is something we can be proud of in this area. Also, while Austria’s per capita national income has doubled in the thirty and a half years since the change of regime, Hungary’s has tripled.
Although the current global economic crisis is temporarily slowing down the process of catching up, if we build on the achievements of the decade we have left behind, we have every reason to be optimistic.
We have made great strides and are moving in the right direction. And if anyone doubts this, take a close look at Eurostat’s latest statistics.
Title image: Mercedes assembly line in Kecskemét, central Hungary.