ADVERTISEMENT

EC sees Hungaryʼs robust growth as opportunity for reform

EU

The European Commission suggested Hungary could better use its robust economic growth to affect structural and institutional changes that would contribute to sustainable growth over the longer term in an annual country report released on Wednesday, state news wire MTI reports.

"The current good economic environment creates an opportunity to address the main challenges of the economy, in particular related to the shrinking working-age population, low productivity growth, increasing inequalities and low efficiency of natural resource use," the EC said in the report.

The EC said in the report that Hungaryʼs economic growth rate, supported by an increasing number of workers, parallel with only a "modest" increase in productivity, is "set to reach its limits" as the labor market nears full employment.

It faulted government-coordinated wage increases for raising labor costs at a faster rate than productivity growth and said home subsidies have contributed to a rapid rise in housing prices as demand outpaces supply, creating some risks of overheating. The EC was also critical of the governmentʼs procyclical fiscal policy which has limited an improvement in public finances.

In an assessment of action Hungarian authorities have taken on country-specific recommendations issued a year earlier, the EC said "limited progress" had been made on integrating vulnerable groups in the labor market; improving educational outcomes; strengthening primary healthcare and supporting preventive health measures; focusing investment-related economic policy on R+D, transport infrastructure and energy efficiency; improving competition in public procurement; and reinforcing the anti-corruption framework.

The EC said Hungary had made "no progress" on a recommendation to "improve the quality and transparency of the decision-making process through effective social dialogue and engagement with other stakeholders and through regular, appropriate impact assessments", adding that Hungaryʼs stakeholder engagement in developing primary law is lowest among the EU countries in the OECD and that indicators on the use of evidence-based instruments rank the country in the bottom group of EU members states.

The EC published reports analyzing each member stateʼs key socio-economic challenges on Wednesday. The country reports focus on four dimensions: environmental sustainability, productivity gains, fairness and macroeconomic stability.

ADVERTISEMENT

Digitization, sustainability among characteristics of future... Analysis

Digitization, sustainability among characteristics of future...

Lawmakers approve residency permit for digital nomads Parliament

Lawmakers approve residency permit for digital nomads

Transformation Delineation - Microsoft country general manag... Podcasts

Transformation Delineation - Microsoft country general manag...

ITM, capital gov't agree on support for public transport City

ITM, capital gov't agree on support for public transport

SUPPORT THE BUDAPEST BUSINESS JOURNAL

Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.