How did the Romanian economy outperform the Hungarian one?

The macroeconomic data published the other day caused a bit of a shock across the nation. According to the data, in terms of gross national product per capita, Romania has now unquestionably surpassed Hungary.

Romanian GDP per capita preceded the Hungarian one

As we have written earlier, Romania caught up with the Hungarian GDP per capita. Hungary’s GDP per capita in 2022 was 77 percent of the EU average at purchasing power parity (PPP), according to a preliminary release by Eurostat. And while Romania’s GDP per capita was 74.1 percent of the EU average in 2021, in 2022, it rose to 77 percent. This puts Romania, Portugal and Hungary in the 8th place in the overall list. Now it seems like the Romanian economy is getting stronger and stronger, preceding the Hungarian one in terms of gross national product per capita.

How could the Romanian economy catch up?

During the Ceaușescu era, the Romanian economy was in terrible shape. A regime similar to the GDR of the time was formed over the course of a few years. In contrast to the Hungarian and Yugoslav eras, which on the surface appear spectacularly Western, the level of economic development was lagging behind compared to the virulent visual technical showcase in the big cities and in the locations frequented by tourists. The retrograde changes perceptible at the level of cultural and nationality politics quickly spread to the economic system as well, writes piacesprofit.hu. The previously export-focused economic structure has become import-oriented. Self-sufficiency has become more and more central in global economic planning.

The Romanian revolution of 1989 can even be seen as a hunger riot, which was a result of the massive impoverishment prompted by the government’s system of instruments. After that, Romania began its independent life as a moderately developed industrial country with virtually no foreign currency public debt. During the decades of Kádárism, Hungary accumulated one of the world’s highest levels of public debt per capita, while Romania practically repaid its foreign currency debts.

The level of debt ratio as a key factor

The rate of catch-up in Romania can be attributed mainly to the blatantly moderate level of debt ratio. Especially in addition to the inflow of working capital that has picked up since the end of the 1990s. Meanwhile, Hungary reproduces a series of new and new debt crises, so since the 1970s, the best of its public resources have been consumed by its own debt service. In accordance with the above, the main explanation for the Romanian catch-up dynamics is to be found in the low debt ratio, the level of which, even during the COVID crisis, did not exceed the 50 percent level measured as a proportion of the national gross product.

As we wrote a few days ago, there are new anti-Hungarian voices in Romania. Now they are demanding the demolition of the new Kölcsey statue, details HERE.

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10 Comments

Norbert says:

03/05/2023 at 20:53

Well. We have our Politicians ruling by decree – so they can react faster and more appropriately. Right?

And debt … We can always borrow – however, as I have pointed out countless times, the rates are horrendous and will bite!
Mongo says:

04/05/2023 at 06:24

it’s easy. Romanians leak the balls of Brusseles and USA like a prostitute while Hungary does not.
Septimiu says:

04/05/2023 at 11:06

Not exactly. Romania recover economics starting with 2007 when 2 major events occurred. 1 UE. 2. Unique tax cote for salary and unique tax cote for profit of companies. It was a big problem for Romania not having public debt. Western countries invest in Hungary in ’90s because they want their money back and was in their own interest Hungary to produce good and money. In ’90s almost no-one invest in Romania.
Ioan says:

04/05/2023 at 16:06

Mostly the Hungarian non-growth economy is based on the Orban policies.
Lots of foreign companies were bullyied by the government, and they choosed to quit.
RomanianWorker says:

04/05/2023 at 23:36

Viva Romania ,

love you Hungarian broathers 🫂
Georgel says:

05/05/2023 at 05:34

The last sentence really was not needed. Romania will outperform Hungary, because it has more population, more resources and foreign investment will increase. Has nothing to do with Orban or UE/USA balls.
Ioan says:

05/05/2023 at 21:27

I love Hungary, a country I’ve visited a few times and I was always welcomed, although I am Romanian and I only know a few words and phrases in the Hungarian language. Same of my best friends are Magyars. I really don’t understand why some people say we can not get along well together. That’s what politicians want you to think, us normal people don’t have a problem with one another. A friend from Cluj Napoca.
Vince says:

06/05/2023 at 14:47

…why they avoid to tell the whole truth…Victor orban rudimentary but corrupted policies are to blame…they will loose more by keeping this retarded concept of centralism, political and economical…people will suffer more by believing in those mid eval tales about pur nation and empires…
Mao says:

03/10/2023 at 00:57

Hungary became Orbanistan and while it received between 10 and 6 times more investment per capita (including EU money) the dictatorship and the collapse of the rule of law can only have one kind of an effect over the economy.

Romania reduced corruption while Hungary increased it, and not only that, but the cronyism is even worse, because people appointed on other criteria than competence are causing more damage than people who steal but are otherwise good administrators.

In spite of what people say, Hungary STILL gets more investment and EU money per capita, but the investments are much less profitable than in Romania.
ROMANIA says:

14/02/2024 at 12:33

Romanian Here. EURO STATS says Romanian GDP per capita is LOWER than Hungary ! EVEN GDP is lower if you put the population number. STILL TODAY HUngary GDP is better than Romania ! ! ! SO …YOU ARE WRONG my hungarian frined ! even though…Romania IS A SUPER RICH COUNTRY…WAY RICHER than Hungary…but the population is weaker and poorer…THIS ALONE says a lot…Cheers from Romania Black Sea Costs- CONSTANTA