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On GDP growth and public debt

August 25th, 2014

A conservative columnist points out that despite pessimistic projections, Hungarian GDP growth is the highest in the EU. A left-wing pundit shoots back that the government could not reduce the public debt.

The Hungarian economy grew 3.9 year-on-year, in the second quarter, which is the fastest growth in eight years and the highest among all EU member states. Public debt, meanwhile, has climbed to 85.1 per cent of GDP. In its quarterly assessment the National Bank wrote that the increase is the result of the weaker Forint and the increase in the reserves. The National Bank predicts that the debt ratio will sink below 80 per cent of GDP by the end of the year.

In Heti Válasz, editor in chief Gábor Borókai finds it peculiar that while Hungarian GDP growth is the highest in the EU, economic analysts paint a rather pessimistic picture of the country’s growth prospects. Borókai recalls that just a day ahead of the publication of GDP data, Napi.hu, the leading Hungarian business daily published a report by the German ZEW Institute and the Austrian ERSTE Bank, in which 82 per cent of analysts said that Hungary’s economic outlook is ’fair’, while the remaining 18 per cent considered it outright ’bad’. Although influential economic analysts turn out to be highly biased in their assessments, their expertise is left unquestioned even after their predictions are proven false, Borókai concludes.

The Orbán government has lost the war on public debt, Miklós Bonta declares in Népszava. The left-wing columnist believes that the increase in public debt shows that MNB Chair Matolcsy’s ’unorthodox’ policies have failed. As for future prospects, Bonta predicts that the rise in public debt foreshadows further restrictions and austerity measures.

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