Hungary’s inflation will be the highest in Europe in 2023!

Válasz Online, a Hungarian independent media outlet, published an interview with two Hungarian economists. They discussed the mistakes of the Orbán cabinets in the last 12 years and the prospects of the Hungarian economy. Unfortunately, their forecast is not very reassuring. They expect inflation will be the highest in Hungary among all the European countries. Furthermore, they believe that no EU money will come until Hungary does not join the European Public Prosecutor’s Office, which would be considered a defeat concerning the anti-EPPO policies of the government. You will find further details below.

What went wrong?

Válasz Online wrote that economists Dóra Győrffy and Csaba Lentner gave an accurate forecast last year about the economy after the general elections. They are members of the Eötvös Csoport, a group of conservative intellectuals. Mrs Győrffy is a political scientist and economist, a member of the Hungarian Academy of Sciences and chairwoman of the Economics Committee. Mr Lentner is an economist teaching at two Budapest universities. He is vice-chairman of the Hungarian National Bank’s Pallas Athéné Domus Meriti Foundation board of trustees.

Lentner said that the previous administrations stocked economic successes between 2010 and 2019. However, that success was not that admirable in an international comparison. Furthermore, the Hungarian economy could not cope with the consequences of the coronavirus epidemic, the war in Ukraine and the unfolding food and energy crisis. That is because the fundaments of the Hungarian economy are much weaker than thought earlier. 

Győrffy added that the Hungarian government could not accumulate financial reserves in the last 30 years. That is why the country is not resistant enough in times of crisis. Lentner said the government distributed a lot of money before the elections, but there was no economic performance behind it.

• Read also: IMF: Hungary is in the biggest crisis due to the Russian gas shutdown

No agreement with Brussels means billions of euros lost

She said Hungary would only get the much-needed EU funds if it joined the European Public Prosecutor’s Office. If the money does not come, the consequences will hit even the prime minister, bearing sole responsibility. Furthermore, she said that though the contracts were confidential, Hungary received Russian gas for Moscow’s market price. However, the government kept telling the people for a decade that they did not have to save gas as there was plenty of cheap supply. Therefore, only a few invested in energy-saving developments. This means that we will have to pay much more since the government modified the utility and energy price cap scheme.

Győrffy said that the government would not like to reach an agreement with Brussels. If they wanted, the Hungarian foreign minister would not have travelled to Moscow to take photos with one of the faces of the Russian invasion. Furthermore, the Hungarian parliament would not have accepted a resolution claiming that the European Parliament should be dissolved. Moreover, Orbán would not have vetoed the global minimum tax infuriating the United States.

• Read also: Hungary were the only country to indicate that we would vote against EU gas-saving decree, says minister

The highest European inflation in 2023 will be in Hungary

Lentner said that without the EU funds, the government would have to raise incomes. He said that the taxes of the SME sector and multinational companies should not be increased. He suggested that the new “national” business circles should pay more. That includes, for example, Lőrinc Mészáros, who became the wealthiest Hungarian in the past years, with government help.

Győrffy said that the highest European inflation in 2023 would be in Hungary. The price caps even worsen the situation since shops raise the prices of other products. Meanwhile, the state gets a record high revenue on the VAT, so inflation is a way of economic restrictions.

• Read also: Property prices and rents may fall in Hungary due to expensive gas and energy

Price decrease on the property market?

As a result of the increasing base rates, the price increase in the Hungarian property market will slow down or even reverse, she added.

She said that the way out would be to strengthen democracy, the rule of law, and the market and invest a lot of money in education. Lentner agreed with the importance of building a knowledge-based economy. He added that the Russian gas import to Hungary would not stop. Moreover, if the EU weakens, Budapest’s position might become better.

Source: Válasz Online