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Hungary about to enter period of growth unseen in 14 years

Mihály Varga
Europe   The long-term GDP growth band of 3-5 percent

Hungary’s economy is expected this year and next to grow at a pace unseen in the past 13-14 years, by above 4 percent annually.

This is within the long-term GDP growth band of 3-5 percent, desirable for economic convergence, Minister for National Economy Mihály Varga said at a conference organized by the Hungarian Chamber of Commerce and Industry, to mark the beginning of business year.

Mihály Varga added that 2016 was a “peculiar year” with annual growth of 2 percent, as it was a time between two EU programming periods, the industrial sector was practically stagnating, the output of the construction sector slumped, falling by 15 percent, and the performance of the agricultural and market services sectors were the main drivers of growth.

In the opinion of the Minister, this period has proven that the Hungarian economy was capable of posting above 2 percent growth even without EU funds.

Quoting data compiled by the Eurostat and the European Commission, Mihály Varga said that Hungary’s potential growth path has reached that of the Czech Republic; until 2020 it is expected to have substantially exceeded the pace of growth of our major peers, such as Austria and the Czech Republic.

The six-year wage deal and tax reductions brokered in last November are to create the foundation of competitiveness growth for the next six years, he stressed.

The Ministry sees steady, firm advancement concerning convergence in terms of purchasing power parity in coming years, he noted.

This year is to bring a real wage increase of more than last year’s 7.3 percent, he stated.

Regarding labour market trends, a positive U-turn can be observed, as the unemployment rate has hit 4.3 percent, and there is not a single sector which would report of labour over-supply, he said.


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