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Hungary's economy had seen the price of imports skyrocket, says Finance minister
budget economy Hungarian economy Hungarian government Hungary Hungary's budget Hungary's Finance Ministry
Mihály Varga, the finance minister, in an op-ed published on Tuesday, said fiscal policy and wages only had a mild effect on inflation and the current account, and external factors were more at play.
In his article in the business daily Világgazdaság, Varga said the jump in energy prices, raw materials and transport costs, as well as the re-pricing amid the post-pandemic economy — services in particular — was largely behind the 6.5 percent headline inflation.
Fiscal policy, he said, had an impact on inflation through price regulation and the indirect effects on demand in the economy.
Regulated prices have increased by 0.1-0.8 percent each year in the last seven years, the minister said, adding the government recently capped the price of fuel at the pump at 480 forints per liter. Policymaking has, on the whole, moderated inflation, he added.
Neither has budget-related consumer demand stoked inflation, Varga wrote. Like in other EU countries, the budget deficit ticked up due to Covid- and economic recovery-related measures.
Hungary's economy has rebooted at a fast pace, and up until the summer growth exceeded the pre-epidemic period, he said, adding that investments geared towards protecting and creating jobs helped to produce the third biggest increase in employment in the EU.
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Varga said that when it came to wages, there was an important distinction to be drawn between gross wages and the wage costs, with the wage burden on employers falling from 28.5 percent to 13 percent over the past decade. Meanwhile, wages have grown in line with the economy's performance, so rising wages have not really further fueled inflation, he added.
Varga said
Hungary's economy had seen the price of imports skyrocket, however.
The poor exchange rate may have contributed to this, he added.
Meanwhile, the current account had turned negative by 2019, paired with strong economic growth backed by robust domestic demand and a high investment rate, he said. The Covid recession had a moderate effect on the external balance: falling imports and less repatriation of capital by foreign-owned companies partially offset tourism and other losses. While the current account deficit widened, the inflow of EU money quickened, and as a result, Hungary's ability to secure financing abroad remained strong, he said.
The first half of 2021 saw some improvement, though preliminary figures should be treated with caution,
he said. Real data on the income of foreign companies will only be available after tax returns have been processed, typically in September of the year following the year, he said.
Still, the recovery, he added, had various detrimental effects on the financing position in relation to the rest of the world.
So, Hungary may again become a net borrower, he cautioned. The peak in this respect was likely in the fourth quarter of 2021 and the first quarter of 2022, with a current account deficit forecast at 2.8 percent and 2.9 percent of GDP, respectively.
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Concerned : says:
"Smoke and Mirrors" – the Economy continues to widen in the major catagories, that are the indicators refered to and used that highlight the performance of a country – Economically.
Prevalent is the clear message that the Forint continues to worsen in its valuations agains all the major currencies of the globe.
Hungary is being observed closely and the global currency market is a healthy indicator of the "thoughts" through Economic and Financial Formulas and Evaluations – in the accessment of a country, its present position.
Hungary – through the re-shaping of the World post February 2020 – the mass changes witnessed and still to eventuate, in the Economic and Global World Financial Markets, this "Flippancy" position, will continue Globally for the next 2 to 5 years.
This is a time period that pre February 2020 – there was a "core" functionality of the operations of countrys Economic and Financial management which was a Global likewise formula.
February 2020 has changed the World, our lives, and this CHANGE – is still 2-5 years to play out, until countrys and Globally – it finds its CORE – that becomes the post February 2020 base that Economic and Financial – ideas and philosophy can be confidently applied to and function.
The Govenor of the – Bank of Hungary – when he speaks PEOPLE must Listen.
In his opinions and advice he is giving, clearly they indicate – he does certainly not see things through" rose coloured glasses."
Does he see – Hungary in a present vulnurable Economic & Financial position ? – anwers Yes.
Does he see a "Flippancy" – a softening underbelly – to the core of the Hungarian – Economic & Financial landscape ? – answer Yes.
The widerning of Government debt – the deficit factor – through Government on-going spending – mass devaluation of the forint – and into this – the "aggressive" progress and effects being witnessed through the 4th wave of this novel coronavirus, that will be present in the winter months, that will bring No tourism – we are CHALLENGED.
National Elections April/May 2022 – we are CHALLENGED and the Economy come that time, will be different from the time I write this commentary, which I beleive, will be in a "sickening trend" – soft trend – not helped by increasing Inflation.
Property Game in Budapest, Hungary – Interesting.
Sellers to Buyers – massive and dangerous indifference.
Supply outstripping demand 2 to 1 "dangerous" continuing to widen ratio.
Sellers Market and oversupply of Properties – we continue to build on apartments, flats, houses and renovate to sell on – Dangerous.
List of available apartmnts, flats, houses for Rent – on the Rise in Budapest, Hungary.
Hotels – we continue to build – oversupply at present time – will be the case going forward – no tourism but when a degree of normality returns to our lives – the Hotels on offer – who will fill them ?
Plenty to choose from which could enable price bargaining ///
Complex, vulnurable , flippant – an atmosphere of un-certainty – times we live in Hungary.
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