Even after a significant increase in wages, Hungarian labor will still be cheap, so the government could try to push the economy forward by boosting consumption and investments, believes the lead analyst at Raiffeisen Bank.

High-pressure economy 2.0 has begun, with the government subjecting everything to increased investment and consumption, Zoltan Torok, senior analyst at Raiffeisen Bank, told HVG. Of course, this comes at a cost: the deficit target cannot be maintained, and the national debt can only decline very slowly.

The previous period in which the government attempted to forcefully rotate the economy – coined by politicians as “we are ahead of the curve” – was between 2016 and 2019. Unlike before, there are no longer very cheap loans, and now the focus can be on interest rate caps, subsidized loans and wage increases.

See also  In the end, Volvo will actually produce a multi-purpose vehicle

According to the analyst, wages may continue to rise in the coming years, just because of the limited labor supply, and the private sector will also pay higher and higher wages. The logical consequence of this is that inflation will remain high, but Zoltan Torok is not so sure about this: prices have risen in recent years so that there is still room for wage compensation. Labor costs are now 11 euros per hour on average in our country, and 15 euros in other Visegrad countries, that is, if we get close to them, it will not be possible to say that Hungarian labor is expensive – according to his calculations.

Details in this week's HVG and hvg360.