Economic Growth Expected to Continue in Hungary

  • 10 Mar 2023 8:43 AM
  • Hungary Matters
Economic Growth Expected to Continue in Hungary
The government expects economic growth to continue in the next twelve to eighteen months, exceeding 4% in 2024, while state debt and government budget deficit will fall, Finance Minister Mihály Varga said at an event of the Chamber of Commerce and Industry.

Addressing the Chamber’s year-opening event, Varga said major resources are expected to be spent on energy-efficiency developments and businesses can participate in these as suppliers.

Among key elements of the economic policy of the coming period, Varga listed family support policies, the continued reduction of the administrative burden and the focus on regional development aspects.

Orbán: Gov’t Focused On Economy

Prime Minister Viktor Orbán, addressing the year-opener event of the Hungarian Chamber of Commerce and Industry (MKIK), said it was clear from the make-up of his cabinet that it was focused on the economy.

Though cabinet reshuffles within a single electoral cycle are not typical, certain changes became necessary shortly after the formation of the government last May, Orbán said.

He said the change had been made because it had become clear that the sanctions imposed by Brussels had resulted in a rapid rise in energy prices, and the issue of energy had become the key to economic success and the country’s financing.

This meant that an independent energy ministry was needed, Orbán said, praising the work of Energy Minister Csaba Lantos.

Unlike general European tendencies, Hungarian public debt and the deficit declined in the last three election years — 2014, 2018 and 2022, Orbán said.

It is therefore “silly, dumb and malicious” to accuse the government of shaping the 2022 budget according to campaign considerations, he said.

The government remains committed to market and private capital, he said. Hungary will not be able to achieve its goals without market financing, he said.

The government will intervene only until market financing is restored, and will endeavour to complement missing interest and liquidity levels, he said. “But that is crisis management and not a change of direction,” he said.

Regarding the “rebuilding” of ties between Russia and Hungary, which MKIK head László Parragh welcomed in a previous speech, Orbán said those will be determined by “a reshuffle in Europe’s power structure”.

That “experiment”, rather than purely economic policy considerations, will determine whether Hungary’s ties with Russia will be revived, he said.

Europe is weaning itself off Russia which has so far provided cheap energy and raw materials, in exchange for modern technology, Orbán said.

That energy dependence is now being “slowly but surely taken over by another,” he said.

“Hungarian foreign and economic policy will have to consider what sort of relations can be created and sustained with Russia in the next 10-15 years,” he said.

Orbán: Hungarian Economic Policy to Remain Coordinated

Hungarian economic policy will remain coordinated, which has been an important element of its success so far, Prime Minister Viktor Orbán told a conference on Thursday.

If the government measures prove successful, inflation will fall in the coming months, Orbán told a year-opening event of the Hungarian Chamber of Commerce (MKIK).

The first signs of that success are already showing, he said. It will then be easier to coordinate the central bank’s instruments to curb inflation with those of the government, he said.

It must be accepted, Orbán said, that economic policy debates are “a podium where otherwise intellectually strong and colourful personalities can see an opportunity to come forward”.

“I am no exception to this,” he said, adding that “this is typical of all of us since we are humans and we are players in the world of politics.”

Speaking of the vehicle industry and the battery plants, Orbán said every Hungarian citizen has the right to live their life in a liveable environment, and everyone has the right to expect that all investments in Hungary are implemented under the strictest possible environmental conditions.

Hungary continues to apply the strictest safety standards for all industrial investments, standards that are stricter than at similar German factories, he said.

Orbán noted that the vehicle industry provides a living for around 300,000 families in Hungary.

He said that a technology shift is taking place in this sector, and if after 2035 only electric vehicles can be manufactured in Europe and the components are not made in Hungary, then these will be made elsewhere and “our conventional automobile plants will have to slowly be shut down”.

The Hungarian vehicle industry must be kept alive, he said, and the necessary production technologies and capacities should be created in the country, he added.

Currently, the four biggest investments in the history of the Hungarian economy are being implemented, the prime minister said, including two in the east of the country. These are “fantastic industrial development achievements, of historic dimensions, which will bear fruit in the coming years,” he added.

Hungary’s automobile industry output reached a record 12,000 billion forints in 2022, Orbán said, adding that the electronics industry’s production also exceeded 10,000 billion forints last year.

Food industry output came to more than 6,000 billion forints and the pharmaceutical sector reached 1,000 billion forints, he said. In connection with investments, Orbán said that Hungary wins investments at the lowest subsidy intensity compared to its competitors.

It is only in the mind of left-wing politicians who have “no clue about the economy” that “capital is there lying in the street and cannot wait to settle somewhere,” Orbán said.

“The reality is that capital makes calculations and the possible locations are competing to attract it,” he said.

Orbán: Linking Universities, Economy Key​​​​​​​

Connecting universities with the economy remains a key issue, “regardless of the dirty moves the European Union is making regarding the Erasmus and Horizon Europe schemes”, Prime Minister Viktor Orbán said on Thursday.

Addressing a conference organised by the Hungarian Chamber of Commerce (MKIK), Orbáns said that by suspending Erasmus and Horizon funding for universities run by foundations, the EU was hurting the competitiveness of Hungarian universities rather than that of the government.

The prime minister said this competitiveness stemmed from the universities being “directly linked to the government’s decision-making through state secretaries and ministers”.

“This is important for the universities, not the government…” the prime minister said.

“This kind of direct link is the biggest competitive advantage we have compared with western institutions.” Orbán said the EU’s decision went against the competitiveness of the Hungarian economy and Hungarian universities and should not be accepted.

The boards of trustees of universities managed by foundations had to be changed, but the advantage offered by Hungarian universities being an integral part of economic development must not be given up, he said.

Orbán said that though he believed Hungary and the EU could come to an agreement, if talks were to fail, these education programmes would have to be financed by the state budget.

If the EU does not grant universities the funds, they will receive research funding above the EU level so that they could establish international research relations, he added.

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