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Hungary exited recession in 2013, but growth potential remains held back by weak investment, low employment among low-skilled workers and shortcomings in labour and product markets. These factors also weigh on social indicators.
Loan creation has not recovered after the crisis owing to a combination of demand and supply factors.
Based on the latest available data up to 2009, the health status of the Hungarian population is among the poorest in the OECD, including countries with a similar level of income per capita.
A rapid decrease in unemployment is a short-term priority to limit social problems and reduce the risk of rising structural unemployment.
Despite a deep recession in 2009 and weak growth in subsequent years, Hungary’s fiscal position compares favourably with many other OECD countries.
Hungarian debt level has steadily increased since 2001, with the debt-to-GDP ratio reaching about 84% at end-2011.
Controversial domestic policies have contributed to uncertainty thereby hurting confidence. Making the economy and financial system more robust to shocks and promoting a business-friendly environment will put growth on a sounder footing.
Using an estimated DSGE model for Hungary, the paper identifies the possible non-Keynesian channels through which a fiscal consolidation may manifest as expansionary.
Az OECD legutóbbi Magyarország országtanulmánya szerint gyors cselekvés szükséges a magyar gazdaság stabilizálásához és egy tartós gazdasági fellendülés alapjainak megteremtéséhez.
Reducing the extent of inactivity and promoting labour supply is essential to foster labour market outcomes in Hungary in the medium term.