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Consumption high, investments low in Hungary

Consumption is still high compared to GDP, while the rate of investments is still low and there is virtually no outflow of loans from the banking sector and people tend to focus on paying back their current loans, Péter Duronelly of fund manager Budapest Alapkezelő said.

With regard to the Széll Kálmán plan, Duronelly said it is “governed from above” and only contains the target figures, while the actual measures will come later. The analyst welcomed the fact that the business sector will have more resources if state expenses are cut.

Duronelly said while the Hungarian economy is still showing signs of recession, consumption is valued at 65% of GDP, compared to a 63-64% in the previous decade with 4% economic growth.

“Export is still driving the economy,” Duronelly said, adding that export is responsible for hiring in the business sector.

“Hungary's economy is driven by export, and still has low investments and low amount of corporate loans,” Duronelly said.

The analyst said there is a 2.5 percentage-point difference in the economy's current growth rate and the optimal potential growth rate.