Varga augurs return to pre-crisis GDP growth in summer

Analysis

Photo by Alexandros Michailidis / Shutterstock.com

Finance Minister Mihály Varga said Hungary's economic growth could exceed pre-crisis levels in the summer months at a conference on the recovery organized by business daily Világgazdaság on Wednesday.

Varga said real-time data from tills connected to the tax office show catering revenue has jumped and is already at pre-crisis levels.

The economic recovery will be supported by employment, wage growth, the launch of new capacities, and European Union transfers, he said.

He added that weak foreign tourism, restrained demand in the European Union, and the phasing out of the blanket repayment moratorium would hold back the momentum of economic growth.

Varga said the government backs the "cautious phase-out" of the moratorium, in cooperation with the central bank and the Hungarian Banking Association. The government wants to phase out the moratorium in a manner that does not "make things impossible" for the 45,000-50,000 businesses and 1 million retail borrowers participating, he added.

He said the goal of fiscal policy remains to support sustainable economic growth, while keeping an eye out for risks such as bond market repricing. He added that Hungarian households' resilience to crisis has "improved significantly", while retail investors' holdings of government securities has nearly doubled to HUF 10 trillion.

Whether or not Hungary's tax system at present can remain in place will be an important factor for Hungary's future competitiveness, he said, noting a push to introduce a global minimum corporate profit tax.

He estimated the introduction of the minimum corporate profit tax would impact 2,000-3,000 companies in Hungary, adding that the government would do everything in its power to maintain the favorable tax environment that has contributed to the country's economic growth.

Finance ministers from the Group of Seven countries reached an agreement over the weekend to introduce a global minimum corporate tax rate of 15%. Hungary's corporate tax rate, at 9%, is the lowest in the European Union.

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