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Hungarian economy weakened by low productivity

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The productivity of the Hungarian economy is very weak and this will greatly impact the chances of catching up with Western economies, says István Kónya, a researcher at the Hungarian Academy of Sciences (MTA), according to online portal vg.hu.

Kónya gave a presentation at an economistsʼ conference in Eger (northeast Hungary). Since 2006, he said, Hungary has not been catching up at all with Germany and the countryʼs economic performance was lower than the regional average during the financial crisis. Before that, households and companies were too optimistic and EUR and CHF-denominated loans were extremely popular, and with these factors, the crisis hit Hungary harder than other countries, Kónya added.

Currently, the biggest problem is very low productivity. While the decrease in the unemployment figure is a positive development, those involved are less qualified, which does not support the rise in productivity. Domestic consumption recovered relatively quickly after the crisis, but investments are still low, which also does not add to productivity, Kónya explained.

Before the crisis, experts estimated that the Hungarian economy would reach 90% of Germanyʼs level by 2040, but following the negative impact of the crisis, mainly because of poor productivity, this rate will not be more than 75%, Kónya concluded.

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