OECD Study
Hungary’s economy will grow by 2.4% this year, then by a more dynamic 2.8% in 2025. These are the central statements of the new OECD report, which Secretary General Mathias Cormann presented on Wednesday together with Finance Minister Mihály Varga in Budapest.
The OECD expects average inflation to be 3.9% in the current year and 3.4% in 2025, after 17.1% last year. The updated report confirmed that the Hungarian economy had made a strong restart after the Corona crisis, but the high slowed down inflation. The resulting decline in purchasing power and the slowdown in investments due to high interest rates led to a slight recession last year. The Secretary General praised the Hungarian National Bank for its decisive action to bring inflation back under control and stabilize the forint.
Completely implement reforms!
Now the country will return to growth, even if the development of international energy prices, the pace of disinflation and the (political) dispute over EU transfers remain serious risks. Coremann called on the government to fully implement its reforms in the fight against corruption. More rule of law will automatically lead to more trust from investors.
At 12%, Hungary’s poverty rate is considered low by international standards thanks to immense social transfers from the state, although these subsidies should be used more specifically for those who are really in need. This also and especially applies to the policy of reduced energy costs. The OECD also advocates educational reforms to improve equal opportunities.
Unbiased situation report
The finance minister highlighted from the report that, like the government, the OECD now also believes Hungary will grow above the EU average. Economic performance is already 5 percentage points above the pre-crisis level, compared to an average of 3.5 points for the EU-27. Varga emphasized the common positions regarding deficit and debt reduction. Hungary also wants to be one of the winners of the green transition, both in the production of renewable energy and in energy storage.
The Finance Minister once again praised the expertise of the OECD rapporteurs, who are far more familiar with the specific situation of post-unification Hungary than other international organizations. An unbiased picture of the situation will be drawn on 130 pages; the Orbán government will be happy to heed the recommendations of the OECD.
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