Orbán: Election to decide between “new” and “old” economy – Part 2
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Orbán said if Hungary’s inflation rate fell from the current level of over 7 percent to 6 percent by year-end, the inflation environment would still be high in the coming years, and part of the reason why, he added, was that Brussels was failing to coordinate climate policy with economic policy, leading to high energy prices.
Also, the Russia-Ukraine standoff and the fate of the North Stream gas pipeline had a part of play, he said. With high energy prices, Russia can bump up its profits selling less gas, he added. The big question over the next few months was what the outcome would be and how this would affect inflation, he said.
“Time is not on our side, it is on their side,” the prime minister said. He noted that Hungary, however, has signed long-term gas supply agreements with Russia, with increasing volumes expected.
Regarding caps on fuel, interest on loan repayments, and food prices, Orbán insisted it had been necessary to intervene to combat inflation. “Let me reassure everyone: we haven’t taken leave of our senses, and we don’t have any intention of restoring price controls.”
The prime minister noted five areas that may hold the Hungarian economy back in the future unless the government made timely decisions: the overly high level of foreign ownership in the economy, the dominant role of large exporting companies, the relative dearth of quality small and medium-sized enterprises among exporters, profit-poor domestic companies, the fact that foreign companies are more productive than their domestic peers, and the country beyond Budapest lagging behind it.
Between 2010 and 2020, Hungarian ownership in the energy sector, the banking sector and the media increased greatly, but the insurance sector, telecommunications industry, building materials and food retail are still largely in foreign hands, he said.
At the same time, without foreign capital “we aren’t competitive, there’s no full employment or new technologies,” he said, adding that it wouldn’t be desirable to pursue a policy with a bias against foreign investment. “At the same time, Hungarian ownership must be strengthened,” he said.