Here’s what we mean when we talk about Orbanomics
“I believe in simple things – work, homeland, families,” Prime Minister Orbán said earlier this week in his address to the Hungarian Chamber of Commerce. He then reiterated the four pillars that define Hungary’s economy policies: competitiveness, a workfare society, good demographics and identity-based politics. “All decisions made by this government could fit into these categories.”
In these weeks leading up to the parliamentary elections slated for April 8, one of the most under-reported topics is one of the most decisive factors in the vote. It’s the economy. And Prime Minister Orbán’s remarks this week to the Chamber, remind us how far we’ve come.
Eight years ago, when Hungarians handed Viktor Orbán and the Fidesz-KDNP alliance an unprecedented landslide victory, they voted for change. Four years ago, in a re-election that resulted in another two-thirds majority, the people voted for continuity. The state of the economy again played a big part in that decision.
That’s because prior to 2010, Hungary was a country of spiraling debt, high unemployment and low (even negative) GDP. In the past eight years, unemployment has dropped from 12 to 3.8 percent. The difference in GDP growth in 2009 versus 2017 has topped 11 percentage points, and the debt-to-GDP ratio has fallen to almost 73 percent from 81 percent. Meanwhile, real wages and support to families have grown, inflation remains modest and foreign direct investment is breaking records.
This is no accident but the result of disciplined economic policy.
It relies on stability. Prime Minister Orbán told the Chamber of Commerce that the government has refrained from the typical election-year budget spending and aims to keep the fiscal deficit below the three percent threshold. That’s about respecting the European Union’s rules in the Stability and Growth Pact, despite the EU’s double standards that allow some countries to exclude the spending of their export-import banks in the central budget accounting where Hungary is compelled to include it.
The prime minister said that the pressure of illegal migration threatens that stability. Defense measures have cost the country some 900 million EUR, but the price is worth it because otherwise Hungary would once again sink, he said, into “regression, decline and stagnation.”
If the country can fend off these pressures and continue to make security a priority, then in the coming years the country can continue to expect important economic gains: annual GDP growth around four percent, full employment, a significant increase in the minimum wage and pensions, a further increase in family support and further decline in taxes on employment.
The prime minister also talked about investments, specifically highlighting the launch of “constructing Central Europe,” a village reconstruction program, and the development of a more unified economic region with the help of strategic alliances with the companies operating in the country.
After two consecutive terms, it is once again up to the voters to decide. If they choose to give us another term in office, the significant economic achievements of these Orbán Government’s – achievements that should be protected and expanded – will be a major factor in that decision.