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Mar 01, 2017 - Zoltán Kovács

Upbeat economic outlook, says PM Orbán, “encourages us to dream big and not lay back”

Hungary’s economy hit the ground running this year. The major indicators are trending positive and international investors have taken note. Signs of a strong recovery, however, do not mean we can rest. Instead, said Prime Minister Orbán, it means that it’s time to dream big.

Speaking on Tuesday at the Hungarian Chamber of Commerce and Industry, the prime minister had a raft of bullish numbers to share. While GDP growth in 2016 came it at 2 percent, exceeding the EU and Eurozone averages, 2017 growth is expected to reach 4.1 percent. Citibank projects 4.3 percent growth in 2018 and Bank of America-Merrill Lynch has also improved its forecast for the Hungarian economy. Even the ever-cautious European Commission joined the chorus in February by raising growth expectations for the coming year.

“Now we have to protect our chance to guarantee a 3.5-4 percent GDP growth for 2017 and 2018, then raise it above 5 percent,” the prime minister said at the chamber.

If these targets are met, it will elevate Hungary to the top four performing economies in the EU. Unlike in previous decades, a record breaking external trade surplus of 10 billion euros accompanied this growth.

The credit rating agencies have noted the turnaround. After all three of the major credit rating agencies upgraded Hungary’s national debt last year, this year got underway with an even more promising outlook from Japanese Credit Rating Agency.

“The national budget balance for January showed a surplus of 123.4 billion forints, which is the best data in the 21st century,” the prime minister reported. Also, the general government deficit has fallen significantly, dropping 388.9 billion forints, and now stands at 848.3 billion.

Last year brought outstanding news on the jobs front as well. In 2016, the unemployment rate fell to 4.4 percent, the best data ever recorded in Hungary. The 2010 campaign promise to create a million workplaces by 2020 sounded ambitious back then but doesn’t sound so unrealistic now. Over the past several years, 700 thousand new workplaces have been created, and we’ve seen 54 months of continuous growth in employment.

Meanwhile, Hungary cut the debt-to-GDP ratio to below 74 percent and even the cautious report of the European Commission expects further, significant shrinkage in the coming two years as the annual budget deficit remains below 3 percent.

The challenge is remaining responsible and prudent in times when the economic outlook appears so bright. Winter will come again eventually. “We need to protect our country from the imminent threats,” Prime Minister Orbán said. “We shouldn’t be so naive to think that everyone will just hang around and rejoice our success.”

This, in his thinking, always means harder work. “In order to sustain promising economic trends, we need to do more than we have done so far,” he said.

The hard work will first and foremost be to defend the national economy against the threats it is facing, (read more on my previous post, ‘The Hungarian model is working,’ says PM Orbán, ‘but faces 5 threats this year’) but also to maintain a cooperative spirit among businesses, employees and the government, and keep it out of daily, party politics.

Hungary’s continued economic progress seems a good bet these days, but we have plenty more work ahead.