Finance Minister Mihaly Varga – Photo: MTI

Finance Minister: Economy still on growth path, with deficit, debt shrinking

The next four years are likely to see high growth coupled with a gradual tapering in public debt and budget deficit levels, according to Hungary's Convergence Programme sent to the European Commission.

The finance ministry expects economic growth of 4.3 percent this year, combined with a budget deficit of 4.9 percent of GDP and a public debt level of 76.1 percent.

Hungarian economic policy over the past year has focused on controlling the epidemic and relaunching the economy, the ministry said in a statement on Friday.

Top priorities were protecting jobs, supporting families and businesses, and promoting investments, it said.

Accordingly, last year the economy expanded by 7.1 percent, much higher than the growth forecast in the 2021 Convergence Programme of 4.3 percent, the statement said, adding that the figure equalled the seventh highest growth level in the European Union.

The new programme aims at boosting competitiveness, creating balanced and sustainable economic growth, and narrowing the gap with average European development levels. A strong labour market and healthy consumption, as well as the high investment rate and new capacities, will serve as the backbone of these goals, the ministry said.

Growth is targeted at 4.3 percent this year and 4.1 percent in 2023, while next four years it is expected to exceed 4 percent each year.

By 2026, the deficit is expected to decline to 1 percent of GDP, while the public debt will be on course to fall to 63.1 percent of GDP.

The forecasts are weighed by risks such as a possible resurgence of the coronavirus and a long-lasting war in Ukraine, it added.

Inflation is likely to average 8.9 percent this year before falling significantly in 2023, the convergence report says. The government continues to aim to protect families from rising prices by capping utility costs and fuel prices, while keeping a lid on interest on household loans and food prices, the statement said.

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