Minister Confident Slowdown in GDP is Temporary
Hungary’s economy faced challenges in the final quarter of 2023, with a modest year-on-year growth of 0.4% and stagnation on a quarterly basis. Minister of National Economy Márton Nagy attributed this slowdown primarily to weak external demand, particularly from key export markets such as Germany.
To address these issues head-on, the government rolled out targeted programs aimed at facilitating businesses’ access to funding. These initiatives, including the Széchenyi Card Program, the Gábor Baross Reindustrialisation Loan Program, and the Factory Rescue Program, played a pivotal role in averting a credit freeze while stimulating retail demand. Minister Nagy underscored the positive impact of these governmental interventions, estimating that without them the economy would have faced a staggering 3% decline.
The government was able to successfully curb inflation to 3.8% by January, alleviating economic pressures. With this milestone achieved, the government is now redoubling efforts to reignite economic growth, with an overarching strategy that involves easing caution among consumers, ensuring investment remains above 25%, and fostering increased labor market participation. Signs of a tentative recovery are already materializing, evidenced by upticks in retail sales and tourism in recent months.
The prospect of improved credit markets, thanks to ongoing government lending initiatives, notably the Gábor Baross Loan Program, is further bolstering optimism. Collaboration with commercial banks is expected to enhance economic dynamics in the near term.
Looking ahead, the government remains steadfast in its commitment to achieving a 4% domestic economic growth target for 2024. Minister Nagy reiterated this goal, emphasizing its continued priority in fostering sustained economic recovery and prosperity.
In summary, while challenges persist, Hungary’s proactive measures and resilience in the face of economic headwinds position it well for a path towards robust growth and stability in the coming years.
