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Hungary Economic Snapshot

Economic Forecast Summary (May 2021)

The economy is projected to grow by about 5% per annum in 2021 and 2022. Economic activity is expected to rebound from mid-2021 onwards, as a swift vaccination rollout supports the recovery of private consumption. External demand will strengthen with the recovery in major European trading partners. The labour market will continue to improve, while high wage growth and a recent currency depreciation will further add to inflationary pressures.

Reform Priorities (May 2021)

Going for Growth 2021 - Hungary

To ensure a speedy recovery that benefits all, the improvement of the business environment and skills should be on top of the policy agenda. State-intervention and regulatory barriers hamper market entry and dampen productivity. Low graduation rates from tertiary education, weak vocational training outcomes and high drop-out rates lower employment prospects of young adults, who are at risk of long-term scarring given the impact of the pandemics on the labour market.

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2021 Structural Reform Priorities

  • Competition and regulation: Reduce barriers to entry and competition and streamline insolvency procedures
  • Education and skills: Improve students’ educational outcomes and employability
  • Tax system: Adjust the tax-benefit system to strengthen work incentives for low-income earners
  • Labour market: Improve participation of low-skilled workers and women
  • Social protection and labour market: Tackle old-age poverty and keep older workers in the labour market

 

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31 January 2019 - Economic Survey of Hungary

Growth is expected to have risen further to 4½ per cent in 2018, following past strong performance. Domestic demand is fuelled by strong private consumption, reflecting high real income gains, and dynamic business and housing investments. The unemployment rate has fallen to a historically low level and labour shortages have emerged. This has been, accompanied by strong and broad-based wage increases, helping to preserve a high level of income equality, and restarting income convergence. Inflation reached 3.8% in the autumn of 2018, partly as the result of higher energy and food prices, before coming down again. Productivity growth has accelerated, although it remains well below real wage growth and the rate prevailing in the decade prior to the international financial crisis.

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