Index – Economy – Mihály Varga will see economic indicators deteriorating in Hungary
Overall, inflation and the current account have been deteriorating in recent months. These indicators are mainly influenced by external factors, such as rising energy, raw material and transportation prices, supply problems, declining international tourism due to the epidemic, and domestic fiscal and wage developments play only a moderate role in their development.
– issued by Minister of Finance Mihály Varga in his article on the World Economy, referring to the fact that the government’s decisions have minimal impact on the “unpleasantly high rate of money deterioration”.
Yet a high value similar to the latest inflation figure of 6.5 percent in October was last measured in September 2012.
(…) Opinions have also emerged that have seen growth-friendly fiscal policies as a major driver of inflation.
– writes Mihály Varga, which may be another message to the Governor of the Central Bank György Matolcsy, who thought a little differently in the Hungarian Nation.
The head of the Magyar Nemzeti Bank (MNB) sees that the budget deficit could be around eight percent of GDP and the government debt ratio around eighty percent of GDP, and the situation with economic transactions with the rest of the world will be reversed, ergo Hungary will buy more than sell.
Matolcsy also pointed out that this is compounded by higher inflation in order to rise behind the predominantly global economic processes,
but it is undoubtedly affected by high domestic budget deficits and higher income outflows than productivity and competitiveness improvements. Some of the steps to improve living standards can be maintained, but some investments that do not strengthen competitiveness should be said goodbye.
Hungary is once again trapped in the twin deficit, ie the simultaneous occurrence of the current account deficit and the general government deficit, from which it was able to break out with a successful fiscal turn after 2010, György Matolcsy predicted, referring to the period when he was considered a fairy tale minister. hu. “The hungarian fairytale,” he said in an ominous interview.
On the other hand, Mihály Varga sees that the budget deficit is really high, but this was caused by the crisis management due to the coronavirus epidemic, and it will be settled soon. According to the price increase, this is mainly due to the increase in import prices.
In his writing, Mihály Varga emphasized that the government was determined to maintain the sustainable growth trajectory established in recent years and to preserve the internal and external financial balance. The following steps seem necessary:
- reducing the budget deficit,
- reducing our energy dependency,
- strengthening the country’s attractiveness to foreign tourists,
- diversifying the economy by strengthening sectors that are less tied to the automotive industry.
By the way, György Matolcsy and Mihály Varga are not talking to each other for the first time;
(World economy/ HVG)
(Cover image: Mihály Varga on November 23, 2021. Photo: Balázs Mohai / MTI)