OECD Predicts Accelerating Economic Growth in Hungary

  • 3 May 2024 5:59 AM
  • Hungary Matters
OECD Predicts Accelerating Economic Growth in Hungary
The OECD forecasts Hungary’s GDP will climb by 2.1% this year and its growth accelerating to 2.8% in 2025, according to its biannual Economic Outlook published.

Commenting on the report, the finance ministry acknowledged in a statement that the OECD’s GDP forecast for 2024 was under the government target, but said that it was still 1 percentage point over the average forecast for all OECD members and in the top fourth of the range.

Growth is expected to be underpinned by lower inflation and interest rates, supporting private consumption and investment, the OECD said, while noting risks posed by international trade and global commodity prices.

The OECD acknowledged that Hungary was attracting significant FDI in the manufacturing sector, mainly in relation to electromobility, that would eventually boost export capacity, it added.

The ministry said that the OECD report highlighted the importance of improving the structural primary balance, adding that the OECD sees the headline deficit falling from 4.5% of GDP in 2024 to 3.7% in 2025 which the ministry said was in line with the Hungarian government’s goals.

The ministry said the report points out the Hungarian labour market’s resistance to crises with a low rate of unemployment maintained around 4%. It is one of the most favourable rates among EU member states, the ministry added.

It said the OECD experts noted in connection with the high employment rate that continuously increasing real wages and improving consumer confidence could all be engines of refuelling growth.

Meanwhile, Econmin: Hungary Must Strengthen Ties with China

Hungary must strengthen its ties with China if the country is to improve its competitiveness, Márton Nagy, the national economy minister, said in Budapest at Thursday’s session of the Thematic Forum on China-Hungary Belt and Road Pragmatic Cooperation.

Nagy said Hungary had all the resources to become a regional logistics hub for Chinese goods given its superb geographical location, advanced domestic infrastructure and a competitive investor environment.

Today, jointly financed road, railway and logistics infrastructural developments enjoy priority in bilateral cooperation, Nagy said, adding that digitalisation may also become an important area of Hungarian-Chinese relations.

The government supports boosting cooperation between Hungary’s 4iG and China’s Huawei. Nagy also welcomed the presence of China’s biggest banks, the Bank of China, China Construction Bank and the China Development Bank in Hungary, noting that ICBC could also soon enter the Hungarian market. He said the government wants more domestic projects added to the list of co-financed investments.

The Budapest-Belgrade railway line is scheduled to be completed by next summer, and he mentioned five logistics, railway and charging network developments of which the details would be announced soon.
Liu Bu, ministerial counsellor of the Chinese embassy in Budapest, welcomed the fact that China’s Road and Belt has been linked with Hungary’s Eastern opening.

He said strengthening relations and shared successes were important to both countries. Hungary is now a distribution hub for Chinese goods in Europe and Hungarian goods are also reaching the Chinese market in growing volumes, he said.

Cooperation is also helped by expanding transport links and the visa exemption announced in March, which covers Hungary in addition to Austria, Belgium, Ireland, Luxembourg and Switzerland, he added.

Nagy emphasised that Hungary’s government rejects protectionist efforts to exclude Chinese goods from the European market, noting that China is now the source of the highest amount of FDI relating to electromobility in Hungary and the country’s 9th trade partner, accounting for 4 percent of Hungary’s foreign trade.

Trade Surplus Widens to Euro 1.7 Billion in February

Hungary had a 1.7 billion euro trade surplus in February, widening from 583 million euros in January, a second reading of data released by the Central Statistical Office (KSH) shows.

Exports edged down by an annual 1.5% to 12.680 billion euros. Imports dropped by 11.0% to 10.989 billion euros.

Trade with other European Union member states accounted for 77% of Hungary’s exports and 72% of its imports during the month. Hungary’s terms of trade improved by 2.0% during the period as the forint weakened by 0.8% against the euro and 0.1% to the dollar.


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