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Rival interpretations of second quarter economic decline in Hungary

August 16th, 2012

The leading left-wing daily claims that worsening economic data may prompt Prime Minister Viktor Orbán to seek tighter control, in order to stave off electoral defeat. The pro-government daily presents the explanation of the Ministry of National Economy, according to which Hungary is doing better than some European neighbours.

The Central Statistical Office (CSO) published preliminary data on the 2nd quarter main economic indicators on Wednesday. According to their report, the Hungarian economy is now officially in recession, as economic output fell for two consecutive quarters in 2012.

According to the editorial in Népszabadság, the Statistics Office report proves that Hungary’s unorthodox economic policy has not yielded the desired results. (The government originally forecast a 2% growth for 2012). The author contends that the worsening economic climate cannot be blamed on the former Socialist-led governments, the world economy or the “subversive” activities of opposition parties. The failed economic policies of Minister György Matolcsy, however, are unlikely to be disowned by Orbán, who treats Matolcsy as “his Siamese twin” and grants him unwavering support.  But if he cannot govern the economy, he may seek to control it, the author argues. He suspects that as dissatisfaction grows, Orbán may find his last resort in a “state of economic emergency”, and “yet another coup.”

Magyar Nemzet, by way of contrast, quotes the comments of the Ministry of National Economy (NGM) in an article entitled “Several countries would be glad to have Hungary’s figures.” The report quotes NGM state secretary Zoltán Cséfalvay as saying that balancing the budget required “sacrifices in growth.” The Ministry argues that the performance of the Hungarian economy was only slightly worse than the EU average, and Hungary could improve on its first quarter results. Cséfalvay also said the Czech economy has produced a steeper decline, while several Eurozone countries are in deeper recession, and the European average is improved by the better than expected performance of the German economy. The article concludes by quoting analysts who forecast a slow improvement for the rest of the year.

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