While most other European countries are still in lockdown and struggling to vaccinate the bulk of their populations, Hungary’s economic reboot is already well underway. With those holding an immunity certificate now able to visit bars, restaurants and other service providers, as well as sports and cultural facilities, the country’s economy is beginning to rebound from the blow brought about by the coronavirus pandemic.
It is in this increasingly bullish economic environment that Prime Minister Orbán announced earlier today at Hungarian economic daily Világgazdaság’s conference on the economic reboot that, should the country’s GDP growth reach 5.5 percent this year, Hungarian families with children will get back any and all personal income tax paid for 2021. According to the prime minister, the economic fallout triggered by the coronavirus pandemic has led to a situation where families with children had to dig into their financial savings to get by. With the HUF 550-580 billion (EUR 1.58-1.67 billion) program, the government aims to ease the economic hardship brought about by the virus.
Not only did Hungary recently outperform most other EU states in terms of economic growth by registering a 1.9 percent GDP increase in the first quarter of 2021 (compared to a 0.4 and 0.6 percent drop in the EU and the Eurozone, respectively), according to estimates from Finance Minister Mihály Varga, Hungary’s GDP is expected to grow 12-14 percent in Q2.
This massive expansion is underpinned by Hungary’s successful coronavirus vaccination campaign, through which we have managed to inoculate more than 53 percent of the population, and the fact that people have been able to return to their normal lives, allowing domestic consumption figures to recover to levels close to what we saw before the pandemic. On top of this, the Hungarian government earmarked north of HUF 2.3 trillion (EUR 6.65 billion), 13 percent of GDP, in the upcoming 2022 budget for restarting Hungary’s economy.
But the Finance Ministry is not the only place where experts are bullish about Hungary’s economic prospects. In a report published last week, the Organization for Economic Co-operation and Development (OECD) revised its forecast from last December of 2.6 percent GDP growth in 2021 and now predicts 4.6 percent and 5 percent increases for 2021 and 2022, respectively.
Among the factors that contributed to the upward revision, OECD commended Hungary’s effective vaccination campaign, the restarting of normal life as early as April, and a supportive budgetary policy. Meanwhile, forecasting high wage growth alongside a relatively high inflation rate, OECD experts see employment levels returning to their pre-pandemic level by mid-2022.
Although things finally seem to be getting back to normal, the Hungarian government will not leave anyone behind. We are constantly working with employers and investors to ensure that the same number of jobs are created that the pandemic destroyed. At the same time, via a moratorium on loan repayments and through the government’s extensive wage support program, we are making life financially easier for Hungarians.