Xpat Opinion: More Signs Of A Recovering Economy In Hungary

  • 20 Jun 2013 12:50 PM
Xpat Opinion: More Signs Of A Recovering Economy In Hungary
By Ferenc Kumin: Late last month, the European Commission announced that it would recommend that Hungary, after nine long years, exit the Excessive Deficit Procedure. The good news , as I wrote at the time, came on the heels of other encouraging reports of promising FDI and consumer skepticism data. Now, yet more hopeful signs that back Prime Minister Orbán’s cautious optimism about a slowly, but solidly recovering national economy. BNP Paribas economists wrote in a recent note that “Orban has strong arguments to back his statement.”

Bloomberg reported a few days ago that “Hungary’s industrial output expanded in April for the first time this year, exceeding economist forecasts and underscoring the government’s prediction of an economic turnaround. The forint and stocks gained.” The trade surplus was at $927M, which is excellent. The agricultural sector also grew by 12.3%.

OECD, despite projecting a decline in a previous prognosis, now says it expects Hungary’s GDP will grow +0.5% this year and +1.3% in 2014. Inflation hit a record low 1.7% in April, and remained at 1.8% in May.

The state debt also continues to wane, slowly but surely, while the average debt in the EU member states continues to rise. Hungary’s debt as a percentage of GDP has declined 2% since 2010. More importantly, the overall debt to foreigners, including public and household debt, fell from about 120% of GDP to 100% just in the past three years.

Prior to 2010, Hungary was nearing the brink of financial collapse, forced to take on a new line of IMF credit in 2008. The new determination to boost financial discipline and the sacrifices of the Hungarian people helped put a stop to this vicious spiral of growing deficits and debt, and now the country is able to finance itself from the market and the Ministry of Economy is able to consider early payback of prior debts.

Still early, but Hungary’s economy is beginning to make a turn for the better.

Source: A Blog About Hungary

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