FinMin calls for keeping Hungary at “forefront of European growth”

Hungary must remain a European growth leader in the next few years in order to regain its development potential enjoyed before the pandemic, the finance minister said at a conference of the Hungarian Chamber of Trade and Industry on Saturday.

Mihály Varga noted Hungary’s “outstanding” economic growth of 7.1 percent. The crisis brought about by the pandemic was far graver than the 2008 financial crisis, he said.

The difference in outcome, he added, turned on the government’s preference for boosting support for ventures, investments and families while cutting taxes, in contrast to the previous government’s fixation on austerity.

Varga said Hungary’s economy had once again reached pre-pandemic levels, unlike in many EU member states.

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Looking ahead, the transformation of global supply chains, a new interest rate environment, and maintaining domestic fiscal balance, together with ensuring long-term growth, he said, were the top challenges.

Whereas reducing inflation, he said, was “urgent”, Hungary’s rate of price increases was the slowest within the Visegrád Group thanks to government caps on utility bills, fuels, basic food produce, and interest paid on loans.

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The chamber’s head, László Parragh, said government support had saved businesses from a “broad wave of bankruptcies”, and he noted job-creating subsidies, simpler rules for working from home, wage hikes, tax cuts and other business subsidies as the most important government measures.

Parragh said the chamber had also played a significant role in crisis management by keeping decision-makers abreast of the needs of the private sector and preparing proposals.

Parragh said capping prices and interest on loans were “good provisional solutions”, adding that high inflation should be “accepted as an impact of the crisis”. But inflation, he added, could not be ring-fenced altogether, “though it can be mitigated”.