Agreement between govt, central bank could be key to growth, Matolcsy says


The key to jumpstarting economic growth in Hungary could be a strategic agreement between the government and the central bank, György Matolcsy, the National Bank of Hungary's new governor, said in a piece published in the fresh issue of weekly Heti Válasz. Such an agreement would be capable of expanding lending resources available to domestic businesses, Matolcsy said. Hungary will see dynamic and sustained growth only if companies have better access to capital, credit, markets and know-how, while the country keeps up the results of fiscal consolidation, he added. He warned that without a growth turnaround, a reduction in state debt, a general government deficit under the 3% of GDP threshold, increasing employment, political stability, and thus the government's ability to act, would all be unsustainable. Matolcsy attributed the 1.7% contraction of Hungary's economy last year mainly to one-off factors, blaming half of the drop on a decline in the farm sector caused by drought. The elimination of some industrial capacities – such as those by Nokia, Elcoteq and Flextronics – accounted for 0.3-0.4 percentage point of the drop and some HUF 500 billion in European Union-supported investments that failed to materialise shaved another 0.2-0.3 percentage point off GDP, he added. He said the fall in consumption was also a factor, but called lower real wages "temporary", adding that "we can be certain" real wages will rise in 2013, causing consumption to expand. Matolcsy said foreign-owned lenders took about HUF 2,700 billion of lending resources out of the Hungarian economy last year, an amount close to 10% of GDP. "If just a portion of these resources would have gone into the economy, it would have grown last year!" he added. Matolcsy said banks were "punishing" the Hungarian government for its "unconventional" measures, but he also blamed the withdrawal of lending resources from the country on the lack of cooperation between the cabinet and the central bank in the interest of growth, on households' cautious borrowing, and on earlier excessively high levels of external financing.


Business Chamber Confidence Index Falls in January Analysis

Business Chamber Confidence Index Falls in January

Lawmakers Could Ratify Sweden's NATO Accession on Feb 26 Int’l Relations

Lawmakers Could Ratify Sweden's NATO Accession on Feb 26

2023 Saw Slump in Housing Construction, Permits Construction

2023 Saw Slump in Housing Construction, Permits

Number of Chinese Tourists in Hungary Quadruples From Pre-CO... Tourism

Number of Chinese Tourists in Hungary Quadruples From Pre-CO...


Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.