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Orbán puts 2012 GDP growth at 0.5% at most

Hungarian Prime Minister Viktor Orban put Hungary’s economic growth next year at 0.5%, at most, speaking in an interview on public television on Sunday.

The increase in GDP next year has to be lowered from 1.5% in the 2012 budget bill to "at least 0.5%, but that’s the upper limit, perhaps it could be lower", Mr Orban said on m1. He added that the forint’s exchange rate to the euro had to be knocked back in the budget bill, too, because of euro zone countries’ worsening performance next year and a possible failure to bolster their shared currency.

"These two factors are bringing us in the direction of recalculating the budget and adjusting it to the changed conditions in Europe. We can only hope that we do not have to do this mid-year," Mr Orban said.

 National Economy Minister Gyorgy Matolcsy said at the end of November already that the 1.5% growth projection in the 2012 budget bill was unrealistic because of the worsening outlook for growth in Germany, Hungary’s biggest trading partner, and instead put it in a range between 0.5% and 1%.

Speaking about National Development Minister Tamas Fellegi’s offer on Thursday to resign to focus on talks with the International Monetary Fund (IMF), Mr Orban said he appreciated the minister’s reasons for wanting to relinquish his portfolio but added that Mr Fellegi had to remain a member of the government if he was to represent the stand of the cabinet.

"We must find a solution for this, but he has to remain in the government, because otherwise how could he represent the stand of the Hungarian government with sufficient weight," he said, adding that details on a decision taken on the matter would be announced on Monday at the latest.

Describing Hungary’s stand at a summit of European Union leaders in Brussels on Friday, Mr Orban said it would be in the country’s best interest if euro zone countries solve the problem of their crisis-stricken currency in a way that does not make Hungarians pay, that does not cause the EU to weaken and that expands the possibilities of Hungarian economic policy.

Speaking about a government scheme allowing early repayment of foreign currency-denominated mortgages at discounted exchange rates, the prime minister said forex loans were bad products and could not remain in the country’s economy.

"Even if banks did not originally want this, they have to see now that it is in their interest too to find a joint solution to withdrawing [forex loans]," he said.