In the Spring 2017 Economic Forecast, the European Commission revised upward its prediction for Hungary’s economic growth, to 3.6 percent in 2017 and 3.5 percent in 2018. The Hungarian Government prognosticates a slightly higher growth rate of 4 percent for both years. The Commission’s growth forecast is higher than it was in the autumn report, and thus the institute acknowledges that in this period the country’s growth rate is to exceed that of the EU.

Thanks to the six-year wage agreement, Hungary’s economic growth is set to switch to a higher gear in coming years. Tax cuts accompanied by wage hikes are facilitating a shift at enterprises to high added value production and higher competitiveness. In this way, the wage agreement bolsters the competitiveness and efficiency of the Hungarian economy, which improves the country’s growth prospects in the medium- and long term. These reasons prompted the Government to predict 4 percent growth for both 2017 and 2018 in the Convergence Programme.

Economic expansion is expected remain not only dynamic but balanced and sustainable as well. The Commission also believes that growth will not cause debt levels to rise: the general government debt-to-GDP ratio is set to decline to 71.2 percent by the end of 2018. The budget deficit is seen to remain below the 3 percent threshold, with 2.3 percent in 2017 and 2.4 percent in 2018, the report notes.

Several data show the good performance of the Hungarian economy: the number of people in employment has hit a new high since the regime change in 1990, and this indicator has been above 4 million for more than three years now in Hungary, while the employment rate has reached a level above the EU average and the unemployment rate has remained firmly below the 5 percent mark. The Commission’s report also prognosticates declining unemployment rates: 4.1 percent in 2017 and 3.9 percent in 2018.

Since Hungary had decided to go own its way, the country has grown stronger also from an economic perspective. It continues to be crucial to defend Hungary’s economic sovereignty in the field of economic, taxation and employment policies.

(Ministry for National Economy)