Hungarian central bank makes recommendations to support sustainable growth

Photo: DNH

The National Bank of Hungary (NBH) is making 50 recommendations supporting government efforts to shape policy promoting sustainable growth, deputy governor Barnabás Virág told MTI.

The NBH will publish the recommendations in detail later in the week.

Virag said Hungary needs a growth plan that can ensure the automatic recovery of the most important internal and external balances from 2022, in addition to strengthening economic growth.

A pickup in government investments, the reinforcement of state programmes for home construction, investment support measures and targeted tax reductions can all rev up the engine of the economy, he said.

“We have every chance for a successful defence. But to achieve a dynamic recovery, Hungarian economic policy needs to find appropriate balances in at least nine areas,” he added.

He stressed that the delayed impacts of the first wave of the pandemic on areas of the economy such as the labour market and the banking system, must be managed at the same time as the consequences of the second wave.

Virag said a shutdown of the economy as in the lockdown in spring is unlikely to be repeated, adding that companies’ reassessments of their business plans are the reason for the slow recovery.

“Many businesses exhausted their reserves during the first wave and could now be forced to adapt to an even greater degree,” he added.

Virag said it is precisely the scale of economic reforms implemented in Hungary in the past decade that create the chance for a confident intervention in extraordinary situations such as the one at present.

“To successfully manage the pandemic, coordinated measures will be necessary in the areas of fiscal policy, monetary policy and structural policy that improves competitiveness,” he added.