If the current trends remain, here is how Romania will precede Hungary in two aspects in 1-2 years.
According to Piac és Profit, Hungary could thank its fast development to the EU funds it received between 2010 and 2020. The EU contributed to Hungary’s economic development, and consequently 5 per cent of the country’s GDP. Meanwhile, the average GDP growth was only 2.3 per cent. If we omit the first year of the coronavirus, that number rises to 3.1 per cent. However, Hungary is far from the EU average even with that.
GKI Economic Research Co said that Hungary’s GDP per capita was 39 per cent of the EU average. That rose to 50 per cent by 2021. These numbers are 64 and 76 per cent in terms of purchasing power parity.
In the case of Romania, their GDP per capita was 62 per cent of Hungary’s in 2010, which grew to 69 per cent by 2021. In purchasing power parity, these numbers are 78 and 96 per cent. That means that the average Romanian citizen’s standard of living is almost the same as an average Hungarian’s. That would have been unimaginable in the 1990s or the 2000s. Furthermore, the numbers show that Romania’s convergence to the EU average was quicker than Hungary’s in the last decade.
Based on the analysis of the GKI summed up by Piac és Profit, how ordinary citizens feel about their economic situation is more important than crude economic numbers. The company analysed the financial state of parents working full time, earning 100 per cent of the national average, and raising two children. Furthermore,
they compared the state of pensioners managing their household and living alone in the two countries.
GKI found that, in 2010, Romanian parents falling into the above-mentioned category got 59 per cent of their Hungarian counterparts’. However, this rate rose to 81 per cent by 2021. If we correct these numbers with purchasing power parity, the results are 68 and 94 per cent. That is because the revenues of the Romanian families increased by 136 per cent in the last decade while this rise was only 72 per cent in Hungary. Interestingly, the latter number includes the extra revenue provided by the family tax allowances introduced by the government. That means the Romanian wage rise was much higher than the Hungarian despite the Orbán government’s family-supporting measures.
If this trend remains, Romania will reach Hungary within 1-2 years.
The average annual revenue of Romanian pensioners was 46 per cent compared to Hungarians’ in 2010. That rose to 63 per cent by 2021. These rates were 50 and 76 per cent if we calculate purchasing power parity. It means that the financial state of Romanian pensioners develops quicker in comparison to Hungarian pensioners’. However, they still fall behind considerably.
GKI highlighted that provided the current trends remain Romania’s GDP per capita calculated with purchasing power parity will exceed Hungary’s by 2023 or 2024.