Válasz Online, an independent Hungarian media, published an interview with two Hungarian economists. They discussed the mistakes of the Orbán cabinets over the past 12 years and the outlook for the Hungarian economy. Unfortunately, their forecasts are not very reassuring. They expect inflation to be the highest in Hungary among all European countries. Furthermore, they believe that no EU money will come until Hungary joins the EPPO, which would be seen as a defeat regarding the government’s anti-EPPO policies. You will find more details below.
What went wrong?
Valasz online wrote that economists Dóra Győrffy and Csaba Lentner gave an accurate forecast last year about the economy after the general elections. They are members of the Eötvös Csoport, a group of conservative intellectuals. Ms Győrffy is a political scientist and economist, member of the Hungarian Academy of Sciences and chair of the Economics Committee. Mr. Lentner is an economist and teaches at two universities in Budapest. He is Vice Chairman of the Board of the Pallas Athéné Domus Meriti Foundation of the Hungarian National Bank.
Lentner said previous administrations had stored up economic successes between 2010 and 2019. However, that success was not so admirable in an international comparison. Moreover, the Hungarian economy could not cope with the consequences of the coronavirus epidemic, the war in Ukraine and the ongoing food and energy crisis. This is because the fundamentals of the Hungarian economy are much weaker than previously thought.
Győrffy added that the Hungarian government has not been able to accumulate financial reserves over the past 30 years. This is why the country is not resilient enough in times of crisis. Lentner said the government handed out a lot of money ahead of the election, but there was no economic performance behind it.
No deal with Brussels means billions of euros lost
She said Hungary will only get much-needed EU funds if it joins the European Public Prosecutor’s Office. If the money does not come, the consequences will affect even the Prime Minister, who is solely responsible. Furthermore, she said that although the contracts are confidential, Hungary receives Russian gas at the Moscow market price. However, the government kept telling people for a decade that they didn’t have to save gas because there was plenty of cheap supply. Therefore, only a few have invested in energy efficient developments. This means that we will have to pay a lot more since the government changed the price cap regime for utilities and energy.
Győrffy said the government does not want to reach an agreement with Brussels. If they had wanted to, the Hungarian foreign minister would not have traveled to Moscow to take pictures with one of the faces of the Russian invasion. Moreover, the Hungarian parliament would not have accepted a resolution calling for the dissolution of the European Parliament. Moreover, Orbán would not have vetoed the global minimum tax that infuriates the United States.
The highest European inflation in 2023 will be in Hungary
Lentner said that without EU funds the government would have to increase revenue. He said taxes on the SME sector and multinational companies should not be increased. He suggested that the new “domestic” business communities pay more. This includes, for example, Lőrinc Mészáros, who has become the richest Hungarian in recent years, with the help of the government.
Győrffy said the highest European inflation in 2023 will be in Hungary. Price caps even make the situation worse as stores raise the prices of other products. Meanwhile, the state gets record revenue on VAT, so inflation is a means of economic restraint.
Falling prices on the real estate market?
Due to the increase in base rates, price increases in the Hungarian property market will slow down or even reverse, she added.
She said that the solution would be to strengthen democracy, the rule of law and the market and to invest a lot of money in education. Lentner agreed on the importance of building a knowledge-based economy. He added that the import of Russian gas to Hungary would not stop. Moreover, if the EU weakens, Budapest’s position could improve.
Source: Valasz online