Varga discusses positive outlook for Hungary economy

Discussing the possibilities of the Hungarian economy, the minister noted that the country had to face a series of unexpected challenges during the past four years. Pandemic was followed by war, and the war still continues, he said.

Mr Varga said the outlook for the Hungarian economy was good and since 2010, the weaker long-term output of the economy had been due to external shocks such as the Covid pandemic or the war in Ukraine. At the same time, the growth potential of the Hungarian economy has been steadily increasing since 2010, he said.

This year, the government is taking steps to reduce the budget deficit and the state debt and achieve sustainable economic growth, Mr Varga said. Measures taken this year have increased the fiscal room to manoeuvre by more than HUF 1,000bn, he added. The government is keeping to the deficit target of 4.5pc this year and will reduce the deficit to 3.7pc next year and 2.9pc in 2026, the finance minister said.

He noted that the financing of 20pc of the state debt is now directly held by domestic retail investors and the aim is to raise this to 25pc. The state debt is back on a downward path again and set to reach around 73pc by year-end, he added.

All forecasts suggest that Hungary’s economic growth could be around 3.5pc next year, above the EU average, Mr Varga said. In addition to stabilised indicators, growth could be supported by stronger consumption, improving foreign trade and persistently high employment. From the government’s side, growth should be supported by fiscal balance and targeted economic programmes.

Among downside risks, the minister named the declining industrial output, the ill health of the German economy and the unpredictability of raw material prices.