Hungary's economic growth in the first quarter shows "sound structure", National Bank of Hungary governor György Matolcsy said on Thursday.
The Q1 growth was not financed with credit, debt or by means of an unsustainable macroeconomic path, Matolcsy said, speaking at a stop on an MNB road show in Miskolc (NE Hungary).
Data published by the Central Statistics Office (KSH) early Wednesday showed Hungary's economy grew by 0.7% quarter-on-quarter in Q1, after contracting 0.4% in Q4. Revisions to earlier published data showed Hungary came out of recession -- in the conventional sense of two consecutive quarters of negative growth - in Q3 of last year, earlier than previously thought.
Hungary's GDP growth will be supported by the government's economic policy and a low inflationary environment, Matolcsy said. He stressed that the 290 forint-euro exchange rate, which is favourable for exporters, has not caused an inflation shock in Hungary.
The new government and the new management of the central bank believe in growth, in the real economy, in industry, and in an alliance between industry, the real economy and knowledge, Matolcsy said. He added that Hungary needs a turnaround toward sustainable economic growth.
Matolcsy said the MNB's rate-setters see room for further easing based on the inflation trend and other processes. At a rate-setting meeting late in April, the members of the MNB's Monetary Council said they could consider a further reduction in rates if the outlook for inflation is in line with the central bank's mid-term 3% "price stability" target and financial market sentiment is unchanged.
The MNB is presenting its recently unveiled "Funding for Growth Scheme", which aims to make HUF 500 billion of low-interest credit available to SMEs, in four cities around the country. The central bank's help is necessary to make economic growth sustainable, as is an alliance between the MNB, the SME sector, Hungarian lenders, local governments, universities, the central government and investors, Matolcsy said.