Hungary’s economy is growing at a healthy rate, new figures show.
According to official data, Hungary’s economy grew by 4.6 percent year-on-year in the second quarter and by 4.5 percent in the first half of 2018.
Economists state that the bulk of growth has been generated by market services; this trend is also reflected by recent dynamic VAT revenue growth. However, the key driver of growth was the six-year wage and tax agreement, due to which economic players received extra income through wage hikes (a higher minimum wage and guaranteed minimum wage) as well as reduced payroll taxes and a lower rate of corporate income tax.
Rising minimum wages have also lifted other wages, and the above-10-percent real income growth registered this year has boosted consumption. The number of newly built dwellings also increased outstandingly, by more than 30 percent.
The government’s shift to a capital-intensive economic growth model – which is being underpinned, among other factors, by the reduction of CIT to 9 percent – is indisputably facilitating wage convergence and investment growth.
A recent Eurostat flash estimate showed that the economies of member states grew on average by 2.2 percent in Q2, so Hungary’s rate of expansion is twice as high as that of the EU.