If we look at what the Hungarian government and the Central Bank have done in this unprecedented situation compared to others, there is no reason to be ashamed, as it is perhaps even more than we could have expected from our own strength. There is little room here to present all the measures, but it is worth recalling the fact that the level of budgetary “heating” of the economy in 2020 could reach a whopping 28 percent of the annual economic performance. Although critics of the government perceive economic policy measures as too few and not enough to bounce back if we compare decisions at the system level, domestic state interventions are also outstanding in Europe. And the government targeted measures where they needed to be: it focused on sectors that began bleeding right away, and future measures will also serve to rebuild sectors facing difficulty as soon as possible. This is facilitated by soft loans from state-owned banks, central bank projects and, of course, the credit moratorium, as well as measures taken in recent days, just to name a few. Of course, all the money in the world may be insufficient and the state can hardly go against the omnipotent market, yet we have reason to be optimistic. I would like to highlight an important sector that is the most decisive. According to recent figures, Hungary’s industrial performance has caught up with, and even slightly exceeded, the volume of 2019.
This includes the fact that 60 percent of German companies operating in Hungary expect their business situation to improve in the next year, and half of the companies believe that their sales will reach their pre-crisis levels next year. And confidence in the Hungarian economy is indicated by the investments that German companies have started or are continuing despite the epidemic. To be more specific: BMW’s new plant in Debrecen, Audi’s solar park in Győr, FAKT AG’s processing and logistics center in Bezenye, Aldi’s service center in Pécs, the Schaeffler Group’s new plant in Szombathely, Lidl’s Eger center, Continental’s test track in Veszprém, and the developments of Güntner-Tata and Sick in Kunsziget, all reinforces the fact that there is momentum in the Hungarian economy. Of course, it all depends on when we will overcome the epidemic. There is also another element to consider. When experts who don’t sympathize with the government expect even more money from the state, they forget that deficits and public debt must be brought back to normal levels; you can’t spend without limits. From this point of view, it is reassuring that the forecasts of important, influential international organizations in 2021 are broadly in line with the expectations of the government and the central bank. But what can we expect? Well, the Hungarian economy may return to the 4 percent growth rate next year, which is due to investments, so the number of jobs may also start a slow recovery. Having said that, we must also note that for us Hungarians, the crisis has brought a lot of suffering and is taking a huge toll, for which no one could have been prepared.
Finally, it is worth returning to the essential point. About 28 percent of Hungarian GDP is the amount mobilized in the economic protection action plan, which is intended to mitigate the effects of the coronavirus epidemic and to help prepare for the post-pandemic situation. And while the additional expenditures and budget revenues do not leave the budget as a whole untouched, the current crisis has found the Hungarian economy in a far better position than the 2008 global financial and economic crisis. Due to this, the government is able to provide coverage for crisis management from its own resources. At the same time, we say goodbye to the old year, but also to the recession!
Title image: First shipment of the Pfizer-BioNTech vaccine is delivered to the Budapest Military Hospital on December 30, 2020. (MTI/Balázs Mohai)
