OECD sees the Hungarian economy gaining strength
Good news came about the Hungarian economy: the OECD forecasts Hungary’s GDP will climb by 2.1 percent this year and its growth accelerating to 2.8 percent in 2025, according to its biannual Economic Outlook published on Thursday.
Hungarian economy to strengthen
Commenting on the report, the finance ministry acknowledged in a statement that the OECD’s GDP forecast for 2024 was under the government target, but said that it was still 1 percentage point over the average forecast for all OECD members and in the top fourth of the range.
Growth is expected to be underpinned by lower inflation and interest rates, supporting private consumption and investment, the OECD said, while noting risks posed by international trade and global commodity prices. The OECD acknowledged that Hungary was attracting significant FDI in the manufacturing sector, mainly in relation to electromobility, that would eventually boost export capacity, it added.
The ministry said the OECD report highlighted the importance of improving the structural primary balance, adding that the OECD sees the headline deficit falling from 4.5 percent of GDP in 2024 to 3.7 percent in 2025 which the ministry said was in line with the Hungarian government’s goals.
The ministry said the report points out the Hungarian labour market’s resistance to crises with a low rate of unemployment maintained around 4 percent. It is one of the most favourable rates among EU member states, the ministry added.
It said the OECD experts noted in connection with the high employment rate that continuously increasing real wages and improving consumer confidence could all be engines of refuelling growth.
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I do not think anyone, even our Politicians, believe our deficit will drop to 4.5 percent of GDP. Lovely little analysis from ING, including the usual observations regarding opaqueness of the Government data (“Trust us! We are fighting for you!”):
https://think.ing.com/snaps/hungarys-deficit-target-raised/
“In our view, based on the detailed February data, even the 4.5% of GDP deficit target is out of reach. We calculate an additional gap of 1.0-1.5% of GDP that needs to be covered if the government is serious about meeting the new target. “. I do prefer facts and data over spin.
Also – instead of the TLDR, perhaps good to read the source document quoted in the article:
https://www.oecd-ilibrary.org/sites/69a0c310-en/1/3/2/21/index.html?itemId=/content/publication/69a0c310-en&_csp_=3184060ecf59639d0f609174b10264b5&itemIGO=oecd&itemContentType=book
Conclusion: “Structural reforms are needed for stronger and more sustainable growth.” … Strength, indeed!