Economy 12 March 2024, 1:11pm

4% growth target unrealistic for this year, admits Hungary's Economy Minister

Portfolio

There will be no austerity measures, consumption will certainly recover, but at the same time, the 4% economic growth this year is not realistic, Economy Minister Márton Nagy told VG.hu at a press event on Tuesday about the goals of the Hungarian Economic Development Agency Nonprofit Ltd. This was the first acknowledgement by the Minister of National Economy that the original macroeconomic assumption of the 2024 budget is no longer tenable.

According to the paper, the minister also talked about

how the budget could be fine-tuned to avoid austerity.

This fine-tuning could also take place now on the expenditure side, he added, but did not mention specifics.

He also noted that exports and growth are bigger problems, and acknowledged that

a 4% GDP growth [a key assumption in the 2024 budget] this year is not realistic.

He said that the primary reason for this is the economic ailing of Hungary's foreign markets, which also affects the Hungarian economy.

The minister was also asked about fuel prices at the event:

Just this morning, we wrote in our analysis that there this year's budget is facing major challenges, as even the new deficit target of 4.5% (revised upwardly from 2.9%) will need to be adjusted, and the path is under threat as the outlook for economic growth has deteriorated in recent weeks. Analysts typically expect GDP growth in 2024 to be between 2-3%.

The minister also said at Tuesday's event that "inflation has gone down and will stay down after a knockout blow".

Cenbank-government relations

Márton Nagy was asked about the Governor of the MNB and the central bank itself. He said that he does not usually talk to György Matolcsy, his former boss. In his assessment, there is a collegial cooperation between the MNB and the government through the institutions, which takes place at a state secretary level, "and this is much more important than the relationship between people".

Nagy also said that the transaction to buy Budapest Airport is close to completion, but that it is important to understand that selling the airport is easy, but buying it back is difficult.

It is the biggest asset purchase the country has ever seen, which makes it a terribly complex deal, as it is not just the owners who have to be agreed with, but also the creditors, he explained, according to the paper.