Varga: 4% GDP growth still a realistic goal

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(Photo: MTI/Zsolt Szigetváry)

GDP growth in Hungary for the full year of 2017 may yet reach 4%, bearing out the cabinetʼs expectations, declared Minister for National Economy Mihály Varga at the Wednesday meeting of Parliamentʼs budget committee, as reported by current affairs website hvg.hu.

Minister for National Economy Mihály Varga (photo: MTI/Zsolt Szigetváry).

"My opinion is that the measurements of the Central Statistical Office (KSH) are inaccurate in several cases, and that 4% is thus a realistic goal," Varga told the budget committee.

Hungaryʼs third-quarter GDP growth was measured by the KSH at 3.6% year-on-year, the statistics office said in its most recent flash estimate released on November 14. The volume of GDP rose by 3.7% in the first three quarters of 2017, compared to the first three quarters of 2016, the KSH added.

"Our economic growth is also indicated by the fact that there have never been so many people working in Hungary, with the number of employed at 4,451,000," noted Varga. "Unemployment has been falling continuously for 60 months, down to 4.1% today," he added.

Varga argued that growth in real incomes has been uninterrupted since 2013, with the 10% increase equivalent to more than a monthʼs salary. Gross average monthly wages measured by the KSH amounted to some HUF 293,000 in September, a 13.6% increase year-on-year, with an identical rise in net wages.

In addition, Varga continued, pensions have risen by 23% in recent years, translating into a 10% rise even in real terms.

Cuts in personal income tax, a reduction in VAT on pork  and family tax benefits are contributing to greater household consumption, said the minister, supported by an expansion in retail trade. This, he added, means not only that the economy is growing, but that the people are feeling the effects of growth.

Varga also noted that industry has performed well, highlighting the 27% growth in construction output in the first nine months compared to the equivalent period of 2016.

The minister observed that budgetary indicators have been influenced by fiscal decisions as planned, adding that significant tax cuts have not negatively impacted budgetary discipline.

Employer contributions have been reduced, leading to rising wages and reduced burdens on companies alike, the minister added.

Varga noted that the ratio of state debt to GDP is on a sustained declining trajectory, having fallen to 73.9%, which he predicted could drop to below 73% by yearʼs end.

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