Weeklies on the prospects of the Hungarian economy in 2024

Liberal commentators think the economy is in a trap as it must choose between high inflation or stagnation. Pro-government economists predict moderate but steady growth.

In Heti Világgazdaság, Zoltán Farkas suggests that last year’s disappointing 6% budget deficit will compel the government to enact austerity measures. Under such conditions, he finds a return to economic growth extremely difficult. Earlier efforts by two consecutive governments to cut the public deficit by 3% in a single year led to recession for two quarters, he recalls.

In Magyar Hang, Szabolcs Szerető identifies what he sees as a tangible tension within the government between Finance Minister Mihály Varga and Minister of the Economy Márton Nagy. While the former insists on bringing down the public deficit to 2.9% of GDP, the latter prioritises economic growth over fiscal discipline. Szerető thinks that Nagy will have the upper hand, at least until the municipal and European elections on 9 June.

In Élet és Irodalom, Tamás Mellár, a former head of the Central Statistical Office and now an opposition MP, is certain that Prime Minister Orbán’s plan to achieve 3 to 4% economic growth will be fulfilled, regardless of the price to be paid for it. Under such conditions, he predicts, it will be impossible to reduce inflation or the deficit of public finances further. As a result, he expects the public debt and the ensuing cost of debt servicing to increase.

In Demokrata, by contrast, Géza Sebestyén, the director of the Economy Workshop of Matthias Corvinus Collegium describes the government’s efforts to combat inflation as extremely successful. Bringing down inflation from 25% to single digits in a matter of 10 months, he explains, is a result that usually takes a decade to achieve. The next step will be interest rate cuts over the board, he continues, which will stimulate investment and, consequently, higher wages.

In Mandiner, Martin Santo and Attila Bácsi believe that China’s global business ascent opens new opportunities to ‘connector states’ that are in a position to act as go-betweens between the West and China. Hungary, despite being a member of the western alliance, they write, can play such a role, namely in the electric car industry where Hungary is becoming a meeting point for Chinese and German producers.

Tags: deficit, growth, inflation, Márton Nagy, Varga