He emphasized that a permanent rise in inflation would jeopardize the recovery, that the Hungarian economy would be able to raise interest rates and that the risk of inflation would “make it mandatory”. (At another conference on Thursday, Barnabas Viraj, Deputy Governor of Magyar Nemzeti Bank, also spoke about the possibility of the central bank raising interest rates in June. We wrote more about this on our partner Privátbakár.hu page, Here.)
After learning about third-quarter economic growth data, they see an opportunity to propose a correction for the general government deficit in 2022, György Matolcsy noted at the Világgazdaság business newspaper restart conference. The Hungarian deficit target of 5.9 per cent next year would be the third-highest in the EU, and it would be a pity to go ahead with such an arrangement.
Eavesdropping is faster than it was in 2008
The central bank governor said that the Hungarian GDP may reach in the third quarter pre-crisis level. He stressed that the depth of the crisis caused by the epidemic was almost the same as in 2008, but the recovery is now much faster. After the previous crisis, the US economy recovered in 11 months, Hungary needed 6.5 years, and the eurozone needed 10 years to reach its pre-crisis performance, adding that the recovery phase for Hungary is now a year and a half.
György Matolksi put it this way, the Hungarian crisis management was effective, in 2020 the Hungarian economy was falling below the EU average, and in 2021 the country was in the best position in the EU with growth data.
Among the regional and emerging countries, Hungary has spent one of its resources on crisis management, said the central bank governor. Since the beginning of the pandemic, the Ministry of Finance has mobilized about 9,300 billion Swiss francs for this purpose, adding that this is roughly the amount that will come into the country from the EU in the full 7-year EU budget cycle.
Credit Centered Crisis Management
György Matolcsy described Hungarian crisis management as credit-centric, as in 2021 the country will be at the forefront of business and retail borrowing among EU countries.
Speaking of the endowment, he noted that the safety net should be reserved for those who really need help, who have kept their jobs or have a job again, they need to start paying their debts.
New program instead of FGS
The head of the Central Bank announced that in continuation of the NHDP program, MNB will launch the Green House Program.
According to György Matolcsy, a new reform programme, a third plan by Kálmán Széll, will be needed for the country to win the 2020s contract after the 2010s. He also noted that the country’s economy was able to recover very quickly because the reforms that took place in the past ten years, including the first three, have matured and succeeded; Of the 56 major reforms, 43 had been launched or implemented by the end of 2013.
The Governor of the Central Bank also spoke at the end of his speech about the need to accelerate digitization, to accept the “money revolution”, in the spirit of which the Central Bank is also turning to digital money. He also noted the need for sustainability in all areas of life, participation in the rise of Asia, social transformation in the context of the technological revolution, and for a significant increase in the rate of smart investment. Data is the new oil – he stressed and noted that he also needs to fix the data.