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Prospects of economic recovery

February 6th, 2021

A left-wing economist fears that the growing public debt will undermine the economic recovery after the coronavirus crisis. A conservative analyst, on the other hand, points out that Hungarian average wages dropped the least in the EU, while the increase in public debt has also remained lower than the EU average.

Népszava’s Miklós Bonta worries about unchecked government spending and fears that Hungarian public debt will get out of control. The left-wing economist recalls that after notching up 65 per cent in 2019, by the end of 2020 Hungary’s debt ratio increased to 80 per cent of the annual GDP. Bonta accuses the government of eliminating independent expert oversight of budget spending. Bonta concludes by suggesting that it will take another ten years to reduce Hungary’s public debt to the 2019 levels.

On Mandiner, Dániel Oláh thinks that the Hungarian government’s coronavirus economic management is a success story. Citing wage data available on Eurostat, Oláh points out that in several EU member states, median wages dropped by more than 10 percent. Hungarian median wages are however only 0.8 per cent lower than in 2019, which is the lowest drop in the EU. Oláh explains this with reference to the Hungarian government’s economic policies, which boosted employment in the years leading up to 2019. As Hungarian unemployment was very low in 2019, the government had the resources to save the existing jobs, Oláh contends. All this, Oláh writes, proves that since 2010, the Hungarian government has been right to dismiss suggestions (made amongst others by the IMF) that it should introduce economic restrictions to boost growth. In an aside, Oláh adds that the increase in Hungary’s public debt since 2019 is also among the lowest in the European Union.

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