Viktor Orbán – Photo: PMO

IMF, EBRD raise Hungary GDP growth forecast

Orbán: Achieving 5.5 percent growth requires ‘forceful government decisions’

The Hungarian government will have to make "unexpected, forceful and serious decisions" with regard to the Hungarian economy in order to achieve 5.5 percent GDP growth in 2021, in which case it will be able to afford a tax refund for families, Prime Minister Viktor Orbán told a press conference on Tuesday.

Answering a question at a joint press conference with his Slovak counterpart, Eduard Heger, Orbán warned that developments over the coming weeks would be crucial in achieving that goal. “Unless the operative body overseeing the relaunch of Hungarian economy, headed by [Minister of Foreign Affairs and Trade] Peter Szijjarto, submits 15-20 forceful and occasionally surprising measures to the government in the coming weeks, the 5.5 percent growth will not be achieved,” he said.

Orbán also noted “serious problems” in the construction industry, saying that steep rises in the price of materials had “syphoned away” government support for home reconstruction from families and into the pockets of manufacturers. Countermeasures could be discussed in government as soon as this week, he added.

IMF raises Hungary growth forecast to 6.2 percent

The International Monetary Fund has revised its forecast of Hungary’s economic growth to 6.2 percent in 2021, from a projected 4.3 percent in May, Finance Minister Mihaly Varga said on Tuesday. In an assessment following a regular consultation, the IMF called Hungary’s fiscal policy response to the economic fallout of the coronavirus pandemic “large and timely.” It noted that the deficit increased to 8.1 percent of GDP and public debt rose above 80 percent of GDP. The IMF said inflation was expected around 4.1 percent in 2021.

The National Bank of Hungary (NBH) reacted swiftly to market pressures by providing ample liquidity through a variety of policy tools, the report said, praising the Hungarian government’s economy protection measures, its budget policy and its steps to preserve jobs and incentivise investments, Varga said in a Facebook post.

The European Commission and Hungary’s Takarekbank have both raised their estimates regarding Hungarian economic growth in the past few weeks, Varga noted. The country has also recently jumped five places to rank 42nd in the report published by the Swiss IMD World Competitiveness Center, he added.

EBRD raises Hungary GDP growth forecast

The European Bank for Reconstruction and Development (EBRD) raised its forecast for Hungary’s GDP growth this year to 5.5 percent in a biannual report published on Wednesday. The forecast was raised from 4 percent in a release issued in September 2020.

The government’s official projection for GDP growth this year is 4.3 percent.

The EBRD sees Hungary’s economic growth slowing to 4.8 percent in 2022.

In the short term, the economic recovery will likely be driven by investments, propelled by higher FDI inflows and the EU recovery fund, and improving household consumption thanks to accumulated savings during the lockdown periods, the EBRD said.

The share of total population that received at least one vaccine dose reached 55 percent at the start of June 2021, the highest share in the region and well above the EU average of 43 percent, which lowers the risk of another pandemic wave amid lifted restrictions, they added.

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