Matolcsy chides gov't for investing in brick and mortar, not brains

MNB

György Matolcsy

National Bank of Hungary (MNB) governor György Matolcsy on Monday said state investments behind the 5.9%-of-GDP budget deficit target for next year are "unsound and unsustainable on a number of counts" as they focus on "steel and concrete" investments rather than "smart" ones in "capabilities, institutions and brains", according to a report by state news wire MTI.

In a weekly op-ed piece published on the website of daily Magyar Nemzet, Matolcsy noted the impact of state investment volume equivalent to 7.1% of GDP on the 2022 budget gap and pointed out that three-fourths of state-investments are construction investments, contrasting that with the relatively low rate of "smart" investments necessary for knowledge-intensive growth.

He said that relatively high investment rates in 2019 and 2020 were in part due to an increase in investment prices and warned that state construction investments amid tight capacity in the sector could drive prices higher and exacerbate imported inflation.

"All sources of growth are important, but the most important source of sustainable convergence is really the expansion of productivity. That can be increased the fastest with digital investments. If the rate of digital investments is low and the rate of construction investments high, the sources of boosting productivity will be narrow. Unfortunately, that is the case [in Hungary]" he said.

Scope Assigns MOL BBB- Issuer Rating Ratings

Scope Assigns MOL BBB- Issuer Rating

Budapest Residents to Weigh in on Rákosrendező Development P... Issues

Budapest Residents to Weigh in on Rákosrendező Development P...

AutoWallis Becomes Importer of Geely Group’s Commercial EV B... Automotive

AutoWallis Becomes Importer of Geely Group’s Commercial EV B...

These Are the Most Sleep-friendly Hotels in Hungary Hotels

These Are the Most Sleep-friendly Hotels in Hungary

SUPPORT THE BUDAPEST BUSINESS JOURNAL

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.