The building of the NBH in Budapest – Photo: wikimedia

Matolcsy: Hungary has failed to ‘overtake in the turn’

Although Hungary has been more successful in managing the crisis than many of its European Union peers, it has failed to "overtake" competitors "in the turn", National Bank of Hungary (NBH) governor Gyorgy Matolcsy wrote in an article published on Monday.

By the end of 2021, Hungary was ranked 21st among the EU27 in terms of the level of economic development, down from 20th place at the end of 2019, Matolcsy wrote in the online edition of daily Magyar Nemzet.

Hungary has again been overtaken by Poland, he said, explaining that though part of this had to do with the share of the tourism sector in Hungary’s GDP, Poland had managed to jump ahead mainly thanks to the advantages of its more competitive economic model.

Hungary’s crisis management outperformed mainly the bloc’s southern member states, along with the Czech Republic, Slovakia and Romania, the NBH governor said.

Hungary’s level of development reached 75 percent of the EU average by 2021, up from 72.8 percent in 2019, he said. This, he said, was “a far better performance” than the average rate at which Hungary had been catching up over the 30 years following 1990, and a faster rate than the annual 0.7 percentage point by which Hungary had been closing the gap on average between 2010 and 2019.

Citing preliminary estimates, Matolcsy said the crisis period of 2020-2021 had allowed Denmark to overtake the Netherlands by around 1.5 percentage points, and Sweden to jump ahead of Germany by almost 2 percentage points. Belgium has also edged ahead of Germany, while Italy has overtaken Malta by around 1 percentage point. Meanwhile, Cyprus has been overtaken by Lithuania, Estonia and Slovenia, Matolcsy said. Spain has also been overtaken by multiple member states, with the country’s level of economic development falling from over 90 percent of the EU average to around 83 percent, he added.

“A slightly stronger performance from Hungary would have allowed it to overtake Portugal during the 2020-2021 crisis,” the governor wrote. “This would have allowed us to overtake not just our old selves in the turn, but also an EU economy that was ahead of us.”

In spite of Hungary’s successful crisis management, the last two years deprived the country of an extra 6-8 percent of GDP growth, Matolcsy said.

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