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Prospects of Hungarian economic recovery

September 17th, 2020

A conservative economist welcomes efforts by the government and the National Bank to boost the economy. A left-wing commentator fears that Hungary may pay a high price for the new foreign currency loans taken by the government.

In Magyar Nemzet, Csaba Szajlai deems a slow, ‘pipe-shaped’ recovery more likely than a V-shaped one both in Hungary and Europe as a whole. The conservative economist writes that despite Hungary’s successful management of the first wave of the coronavirus, the economy is not yet rebounding. Szajlai recalls that the National Bank in a recent announcement projected a 5-6 per cent GDP decline in the first nine months of 2020. In the second wave of the coronavirus epidemic, he suggests, the main challenge is  to defend jobs, which requires the government and the National Bank to offer incentives as well as launching construction, infrastructural and green projects.

Népszava’s Miklós Bonta finds it controversial for the government to claim on the one hand that Hungary is able to boost growth without external help, while at the same time, increasing sovereign dept denominated in foreign currencies by 4 billion Euros over the first 8 months in order to finance the deficit. If the Forint weakens because of the Covid crisis, Hungarian debt servicing will become increasingly expensive, Bonta warns. He also writes that under such conditions, the government should be more restrained in its spending on sports, government info-communication and defence.

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