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Sep 17, 2019 - Zoltán Kovács

Hard work pays off: Here’s how Hungary’s economy defies global slowdown

Despite fears of an imminent global slowdown, Hungary’s economy keeps on keeping on.

While the winds of a world-wide economic slowing can already be felt, said Finance Minister Mihály Varga recently, the Hungarian economy shows no signs of recession. The Hungarian Government’s policies remain effective in the strengthening of the country’s economy and thus - despite the global head winds - we can expect further growth, he added.

But don’t take Minister Varga’s word for it. A few weeks ago, Fitchaffirmed Hungary’s BBB sovereign rating, two notches over the investment grade threshold, with a stable outlook.

In the first half of 2019, Hungary’s GDP saw a 5.1 percent expansion, out of which 2.4 percent was generated by domestic factors, signaling that Hungarian economic actors now have more reserves compared to years prior to Orbán Governments. The indebtedness of the population and companies remains low. The Hungarian banking system remained resilient to shocks, and Hungary's public debtdropped well below 70 percent of GDP to an eleven-year low.

Thanks to the unprecedented economic boom and a GDP growth rate three times higher than the EU average, Hungary has claimed a place among Europe’s best performing economies. Since 2010, net wages have grown by an accumulated 85 percent and the gross wage increase between 2010 and 2018 was thebiggestamong the V4 states. What’s more, Hungary didn’t only outperform the EU average, it towered over its neighbors, too.

Economic performance and increasing salaries are the backdrop to an expanding government program of family support. According to State Secretary for Youth and Family Affairs Katalin Novák, the Family Protection Action Plan has begun to bear fruit: the number of marriages and the fertility rate went up hand-in-hand by 42 and 21 percent respectively over the last nine years.

We need to build a country where people feel safe, Finance Minister Varga said recently at the Budapest Demographic Summit III, where work leads to increased well-being and where there are good childcare and family services.

Besides Hungarian people,investorsalso enjoy the benefits of an upbeat economy: investment volume rose by an annual 18.8 percent in the second quarter of this year. This means that, in absolute terms, Hungary welcomed investments worth 2.4 trillion HUF (EUR 7.28 bn) in that period.