- 7 May 2018 8:45 AM
- Hungary Matters
Varga also told MTI that Hungary’s convergence programme for the 2018-2022 period sent to the European Commission includes a growth projection similar to its economic expansion assumption contained in Hungary’s last convergence programme.
He said growth well above the EU average means Hungary will be able to catch up with the rest of the bloc faster. By maintaining a high growth rate while pursuing a disciplined fiscal policy, the budget deficit and public debt ratios will both decline, he added.
A further goal is for the cash-flow budget to be in balance by the end of the current parliamentary cycle, Varga said. The wage burden is planned to fall to below the regional average by 2022, he said.
Also, as companies and educators become more closely connected, the number of corporate training places will expand, further boosting employment growth, Varga said, adding that the most important task of the government’s economic policy in the coming four years would be boosting the rate of growth.
Improving competitiveness and productivity is key to this goal, requiring support for innovation and infrastructure investments that result in products and services with increased value-added, he said.
Hungary’s GDP growth is set to stay around 4% in the coming years, according to the country’s latest convergence programme posted on the website of the European Commission. Economic growth is planned to be 4.1% in 2019, 4% in 2020, 4.2% in 2021 and 4.1% in 2022.
The projections for 2019-2021 are 0.3- 0.6 percentage points above those in the previous year’s convergence programme.
Household consumption is seen growing by 4.8% in 2019, 4.7% in 2020, 4.6% in 2021 and 4.5% in 2022.
Gross fixed capital formation is set to rise by 7.5% in 2019, 3.8% in 2020, 5.7% in 2021 and 5.1% in 2022.
Inflation is forecast to edge up gradually and peak in 2021 at the National Bank of Hungary’s mediumterm 3% target.
Hungary’s budget deficit as a percentage of GDP is seen narrowing to 1.8% in 2019, 1.5% in 2020, 1.2% in 2021 and 0.5% in 2022.
Public debtGDP ratio is set to decline to 69.6% in 2019, 66.7% in 2020, 63.4% in 2021 and 59.7% in 2022.
The projections for 2019-2021 are 2.2-2.7 percentage points higher than in the previous year’s convergence programme, which the report attributes, to a “significant degree”, to the inclusion of Magyar Eximbank in the general government.