Financial Times: ‘Orbánomics’ stuns critics
The Hungarian economy under Prime Minister Viktor Orbán grew faster than its EU peers in 2014, though critics say this happened in spite of Orbánʼs measures, Financial Times reported today. In 2014, the Hungarian economy grew 3.6%, and as of the first quarter of 2015, it remains at 3.5%. The paper referred to Hungary’s economic policies as ‘Orbánomics’.
Since coming into power in 2010, Orbán introduced a flat-rate income tax of 16%, forced utilities companies to cut household bills and imposed a crisis tax on the telecom, media and financial sectors, and even went so far as to force banks to repay €3 bln in compensation to debtors who took out foreign currency mortgages. Supporters say this has enabled Hungarians to spend more.
Critics say this increase in spending happened despite Orbán’s efforts, and attributed it instead to an influx of funds from the EU and a rise in real wages from the global fall in oil prices.
Both sides agree that the sustained growth won’t last, with the IMFʼs April prediction of a slowdown to 2.7% in 2015 and 2.3% in 2016. Still, critics warn that unless the crisis taxes on banks are eased, lending rates will not improve and investment will stagnate.
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