Finance Minister Mihály Varga said thanks to the high inoculation rate, the fourth wave of the coronavirus pandemic is expected to be relatively weak in Hungary, allowing for an estimated 7 percent GDP growth this year.
Minister Varga told the Portfolio Economic Forum that the deficit is expected to come to 7.5 percent of GDP. Monetary and fiscal policy “must work together” to bring inflation back to around 3 percent, he said. The government sees CPI falling from the beginning of 2022 and the situation “normalizing” by the summer of 2022 to make the mid-term 3 percent target achievable by year-end, Minister Varga said. The CPI target should be achieved gradually so as to avoid a “new wave of recession”, he added.
The minister said the government is committed to start reducing public debt, which has risen to 80 percent of GDP due to the economy protection measures. “Politically motivated debates” with the European Union are expected to “run their course” by the end of the year, clearing Hungary’s access to the recovery funding, he said. Anticipating lengthy negotiations, the government took out a 4.5 billion euro loan from the market in early September, so investment programs suffered no delay, he added. Hungary’s economy is expected to return to the growth trajectory it was on in 2019, “albeit in a slightly different structure”, Minister Varga said.
Photo credit: Facebook/Varga Mihály