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Mar 21, 2017

The OECD says Hungary's economy is moving in the right direction

The OECD acknowledges that the Hungarian government has implemented several structural reforms that are in line with the organization’s prior recommendations

Hungary's economy is moving in the right direction, according to the Organization for Economic Co-operation and Development (OECD).

In the institute's “Going for Growth” publication, the OECD acknowledges that the Hungarian government has implemented several structural reforms that are in line with the organization’s prior recommendations.

The study highlights the dismantling of administrative hurdles, such as the introduction of on-line cash registers and the “greater use of notification procedures and the simplification of professional qualifications”, as some of the measures implemented.

However, the study only examines structural reforms by member countries; therefore it fails to mention the most significant achievement of Hungary’s economic policy - economic growth, which has been on a balanced and sustainable path since 2013, rising dynamically. In addition, external and internal balance indicators also continue to be favorable.

The OECD notes that the tax wedge in Hungary is high from an international perspective, but recent measures, such as the reduction of the personal income tax rate by 1 percentage point (to 15 percent) and the extension of family tax allowances have helped narrow the tax wedge.

The analysis has also chosen to omit the six-year wage agreement, which stipulates the increase of minimum wage and guaranteed minimum wage for skilled workers in 2017 and 2018, and a concurrent reduction of payroll taxes and a flat-rate corporate income tax.