Budapest, December 7 (MTI) – The Hungarian economy could show a potential growth rate of 2.5 percent in the medium term, National Bank of Hungary director Barnabas Virag said on Monday.
Based on the bank’s Growth Report, policy steps in the previous years have significantly decreased the external vulnerability of the Hungarian economy, Virag told a press conference. There has been improvement in the quantitative aspects of growth-determining factors, while there is still much room for improvement in qualitative aspects.
Following the economic crisis, global growth is expected to slow down for a longer period of time and in these circumstances improvement in competitiveness and productivity will be ever more important for Hungary, the bank said.
Net exports were one of the most important components of Hungarian economic growth in the past period and as world trade is falling short of pre-crisis dynamics, and this may carry a downside risk to domestic growth, the report said. Hungary’s economic performance was generally surpassed by the export dynamics, but in recent years the difference decreased, which corresponds to international trends, it added.
The increase in value added content is primarily related to the strengthening of local supplier relations, and the consolidation of the suppliers that gradually settled in after the large manufacturing investments of recent years may have had a positive impact on the Hungarian export dynamics. The increasing involvement of the domestic SME sector may become a determinant element of the process, the report said.