Hungarian Central Bank Governor Urges Economic Policy Reversal
Central bank governor György Matolcsy has called for a complete turnaround in Hungary’s economic policy during the 62nd Itinerant Conference of Economists in Nyíregyháza. Matolcsy argued that a loss of economic policy direction between 2021 and 2024 has undermined the achievements of the 2010s and jeopardized the goals set for the period up to 2030.
During his speech, Matolcsy highlighted two dangerous adversaries facing Hungary: high and costly indebtedness, and high and stubborn inflation. He pointed out that there had been a wrong turn in economic policy, with the government failing to control the budget deficit and delaying its fight against inflation for one and a half to two years.
The consequences of this delay have been significant, with many households and businesses experiencing a loss of wealth due to inflation. This has led to increased state budget expenses and decreased revenues. Matolcsy emphasized that claiming real wage growth will automatically lead to consumption is a flawed economic policy, as real wages only cover half of incomes and the real value of pensions and social expenses has not increased.
He also expressed concern over the shift from a nearly balanced budget to a permanently high deficit, which he described as unacceptable and life-threatening if carried through the decade. Matolcsy highlighted the need for a green re-industrialization and a new service sector to help balance the current account.
In addition to addressing economic policy challenges, the article also mentions the forint’s performance on the interbank forex market. The forint traded at 393.20 to the euro, slightly down from the previous day, and showed variations against the dollar and the Swiss franc.
Overall, Matolcsy’s call for a turnaround in Hungary’s economic policy underscores the importance of addressing key challenges and implementing sound economic strategies to secure the country’s financial stability and success in the years ahead.
