2010 will be a difficult year for Hungary, but recent austerity measures could be an advantage in 2011, National Bank of Hungary governor András Simor said at a conference in Vienna.
Hungary's economy will progress more slowly than its neighbors when the crisis is over, but steps the government has taken to cut the general government deficit and improve the country's growth potential are an advantage, Simor said at the conference on the region organized by economic journal Euromoney.
In 2011, after the crisis, when other countries have to tighten their budgets, Hungary's budget will probably be “in good form”, allowing economic growth, he said.
Hungary not only had to manage the crisis, but the results of fiscal policies that had been followed for years, Simor said. That is why domestic demand is so extraordinarily limited and why Hungary's economy will progress more slowly than those of other countries in the region, he added.
Answering a question, Simor said that central banks have to work more closely with the government in times of economic crisis, but when the situation returns to “normal”, they must again act independently. (MTI – Econews)