Hungary Convergence Programme shows steady economic growth

Hungary’s economy is likely to continue growing by around 4 percent in the coming years, according to the country’s latest annual Convergence Programme posted on the website of the European Commission.

The programme targets annual GDP growth of 4 percent in 2019 and 2020, 4.1 percent in 2021, 4.2 percent in 2022 and 4 percent in 2023. The projections for 2019-2022 vary no more than 0.1 percentage point from those in the previous year’s convergence report.

Household consumption is seen increasing by 4.6 percent in 2019, by 4.7 percent in 2020, by 4.6 percent in 2021, by 4.5 percent in 2022 and by 4.5 percent in 2023.

Gross fixed capital formation is set to grow by 10.3 percent in 2019 before slowing to 3.8 percent in 2020, to 3.5 percent in 2021, 4.6 percent in 2022 and to 3.1 percent in 2023.

The programme projects inflation, harmonised for better comparison with other European Union member states, averaging 2.7 percent in 2019 and 2.8 percent in 2020, before levelling out at the National Bank of Hungary’s mid-term 3 percent target in 2021-2023.

At a press conference detailing the programme, Finance Minister Mihály Varga said the government’s plan was to reduce the public debt to 60 percent of GDP over the next four years. The programme, prepared in accordance with European Union regulations, targets stable and sustainable growth, improved competitiveness and aims to help Hungary catch up with the leading economies, Varga said.

The government’s economic policies will continue to focus on supporting families and preserving the country’s existing economic achievements, he added.

Asked about Hungary’s plans to adopt the euro, Varga said the economy was on “a good path”, adding that the public debt did not even have to be below 60 percent of GDP in order for Hungary to meet the euro convergence criteria. He said that though Hungary was prepared to weigh adoption of the common currency, joining a monetary union whose rules were changing was not in the interests of the country’s economic policy. The government still wants to improve Hungary’s economic indicators over the coming years before looking at joining the euro zone, he added.

Klára Dobrev, who tops the list of MEP candidates for Hungary’s Democratic Coalition (DK) party, said one of DK’s chief EP campaign pledges was to adopt the euro in Hungary as soon as possible. At a press conference on Friday, Dobrev cited Prime Minister Viktor Orban as saying in a recent interview that euro zone members were moving towards a political union and Hungary did not want to be part of it.

“Hungary’s premier has publicly acknowledged that his government does not want to adopt the euro,” she said, adding that “this is an extremely bad policy” that would harm the financial wellbeing of ordinary Hungarians.

Dobrev noted the euro exchange rate was close to 325 forints per euro on Friday, while in 2010, at the time of the economic crisis, one euro cost only 263 forints. She said this was due to the deliberate weakening of the forint by Orban and the head of the central bank, György Matolcsy.

In answer to a question, she insisted that Hungary would meet the conditions for joining the euro zone in the coming years.

Source: MTI