GDP growth just below 5 per cent

A pro-government journalist praises government policy, but admits that Hungary’s high growth rate is also due to external factors.

In his Figyelő editorial (print), Csaba Szajlai analyses the reasons behind the nearly 5 per cent GDP growth the Hungarian economy has produced for the second year in a row. He recalls that this time last year forecasters expected significantly lower growth rates on account of signs of stagnation in Western Europe and the German automotive industry in particular. Those forecasts were not unfounded, he explains, but in the meantime the government introduced measures to stimulate demographic growth which resulted in an increase in the construction industry, due to family home building. In addition, this year was the fourth in a row with double-digit real wage increases. In other words, the unfavourable international market conditions have been largely offset by increasing domestic money supply. All this, however, Szajlai adds, would not have been sufficient to produce this year’s almost 5 per cent growth without significant new foreign direct investment. Szajlai warns, however, that Hungary is still far behind the desired levels in education and the health service, and must watch out for the risks inherent in increasing international market volatility.

Tags: GDP, investment, wages