Economic prospects in Hungary in 2025.
The Hungarian economy is likely to end 2024 with less than 1% growth, while the political and economic leadership sends optimistic messages to both the world and Hungarian citizens.
According to the economic leadership, Hungary will be on a significant growth trajectory in 2025 with the help of starting investments and the latest economic policy measures.
In his two-part essay on the “Magyar Narancs” news portal, László Csaba, honorary university professor and former Minister of Finance, sees a less optimistic picture regarding the development of the Hungarian economy. Based on the numbers, it can be stated that the Hungarian economy is not in the best shape. When preparing the budget, the government envisioned 4 percent GDP growth in both 2023 and 2024. Of this, 2023 became an almost 1 percent decline, i.e. the country did not produce more than 4,000 billion forints.
We have lagged behind the Visegrad countries at all levels, and today, in the case of Bulgaria or Romania, we have to search with a magnifying glass for those indicators where we are ahead of them. According to the analysis of the KSH, between 2010 and 2020, the increase in the productivity of the Hungarian workforce was only 4.7 percent. Not annually, in total. Even if we omit the Covid years, the average annual improvement is still below 1 percent. (Productivity is a very slowly changing indicator: the EU average in the same period was 2.1 percent.) Employment really improved significantly in the 2010s: the determining factor of economic growth was the labor force brought back to the labor market. However, most of the mobilizable labor reserve in Hungary was exhausted by 2020.
According to the economist, the country can move out of this stagnant state with fundamental structural changes.
There will be a need for a ministry responsible for economic and financial policy, the budget and tax policy. In Hungary, this is traditionally called the Ministry of Finance. In addition, there may be a need for one, two, three ministries responsible for the state strategy and development policy of the major sectors, and a member of the government who manages the state assets.
Those institutions supervising the Hungarian economy, which are formally and legally independent, whose current structure and personal composition, to put it mildly, make it doubtful that they would be suitable for performing their functions, are crying out for restoration.
Although a lot of factual information is available about the budget processes, the gap between plans and facts is now so deep that perhaps even the financial government does not see the situation. One of the most serious questions of the near future will be what the real state of the state budget is. The conditions for actual competition must be created in the economy, real innovation must be expanded, education, transport and healthcare systems must be developed.
The driving force behind the operation of a successful Hungary must be economic competition, and especially transparent competition in the management of state funds.
Deregulation must be started in the central systems that have been excessively implemented in recent years, more tasks must be redistributed to local governments, and sufficient local tax revenue must be returned to finance the tasks.