The growth of the Hungarian economy remains one of the fastest in the European Union and is expected to grow at around 4 to 5 percent in the coming years, the Hungarian Ministry of Finance announced in a statement on Wednesday.
Due to the successful restart of the economy following the coronavirus-related economic downturn, Hungarian fiscal policy may return to normal sooner than planned, the statement read. The ministry pointed out that the government will save 755 billion forints (€2.5 billion) in next year’s budget by rescheduling some public investments, thus improving the deficit-to-GDP deficit target from 5.9 percent to 4.9 percent. This will also allow for a faster reduction of the public debt ratio, it added.
The restart of the Hungarian economy has been a success
Hungary’s economy grew by 6.1 percent in the past year, with foreign investment increasing by more than 12 percent. Employment rose to 4.7 million and the unemployment rate fell below 4 percent, meaning the economy requires less fiscal stimulation through public investment, which is good news for Hungary’s budget.
The ministry of finance revealed the government had deferred certain investments at the beginning of December, increasing its financial reserves by 350 billion forints this year while also reducing public debt.
The government will improve next year’s balance forecast by continuing with its current economic policy — saving 755 billion forints by rescheduling investments in public procurement, planning and construction.
Financial stability is strengthening
By taking measures now to stabilize the economy, Hungary can be better prepared for the risks posed to the global economy in the coming years. With a strong, stable economy, the potential for greater foreign investment will further improve, according to the finance ministry.
The announcement stressed that while the government plans to increase its financial reserves, it will still be providing funding for a 13-month pension, family tax rebates, tax exemptions for those under 25, in addition to a reduction in taxes on labor along with an increase to public sector wages valued at 750 billion forints.
