The building of the NBH in Budapest – Photo: wikimedia

Central bank: Hungary competitiveness improves

Hungary's competitiveness has risen to take place 17 among European Union countries, over the average of Visegrad Group members, Akos Szalai of the National Bank of Hungary (NBH) told a press conference on Tuesday, presenting the NBH's Competitiveness Report 2022.

The report uses 160 indicators to gain a comprehensive and objective image of Hungary’s competitiveness, Szalai said. The report mostly leans on 2021 data, he noted.

At the same time, NBH said a switch to a growth model based on sustainable, quality factors from one founded on quantity will require a “competitiveness turnaround”.

Hungary is ahead of the European Union average in a number of gauges of quantity, but he said the country has “much room for improvement” when it comes to indicators of quality. While the local labour market is close to full employment, gauges of labour productivity are low in EU comparison, and although the investment rate is high, the share of investments in software or communications is low. The high complexity of exports indicates a competitive export sector, but the value-added of those products is low, the NBH said.

The NBH said switching to a growth model driven by knowledge and technology may only be sustainable if the change is accompanied by a broad expansion of digitalisation and a green revolution. It noted that while Hungary’s digital infrastructure is competitive in international comparison, boosting its use from relatively low levels requires an improvement of user skills, more business digitalisation and state-supported data reform. It added that the rate of renewable energy used for Hungary’s energy-intensive economy is just 14 percent, and rising at a rate under the EU average.

The NBH called competitiveness of human capital the “aegis” of convergence with a sustainable balance, noting that productivity in Hungary has risen to the largest degree in the EU since 2011, supported in large part by family subsidies. It highlighted the need to strengthen modern skills transfer for the future labour market in primary and secondary schools, while improving staff numbers and quality at universities and making continuous improvements to adult education.

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