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At a hearing before parliament’s economy committee, Nagy said growth would be boosted by the Home Start subsidised lending scheme for first-time home buyers, the gradual rollout of the 14th-month pension supplement and tax cuts.
He added that government measures were necessary to counter the impact on the local economy of the war in Ukraine and the downturn in Germany.
Nagy attributed 60-70% of GDP to consumption which is expanding around 5% a year and adding 1.8 to 2 percentage points to GDP. He added that consumption-driven growth was only desirable in the short term, but the goal was to shift to an investment-driven model.
Nagy said inflation could be around 4.6% this year and then fall to 3.6% next year. The government’s markups cap has helped shave off 1.5 percentage points off of headline inflation, he added.
The budget deficit is expected to be around 5% of GDP both this year and next. The increase in the deficit and fiscal stimulus were necessary due to the German economy’s recession.
The primary balance could be 1.1% the edge up to 1.2% next year, he added. The minister said the government remains committed to keeping the deficit and public debt on a sustainable path.
Debt as a percentage of GDP could be at 73.5% this year and next year. Listing government measures to support the economy this year, Nagy mentioned the Demján Sandor Program, the 150 new factories programme, tax breaks for mothers, doubling the family tax credit.
Nagy said an agreement on minimum wage increases could be reached within hours, with the minimum wage for skilled workers increasing by 7% and for unskilled workers by 10-11% in 2026, which would allow the minimum wage to rise to EUR 1,000 by 2027 and the average wage to HUF 1 mln by 2028.
No change is expected in the government’s economic policy after the elections, as its ideological basis is a work-based society, support for pensioners, and maintenance of tax subsidies for families with children.
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