In defense of Hungary’s economic policy

2013. február 19. 09:42

The full picture is not just about growth. Hungary has had to tackle problems stemming from decades of economic mismanagement, which will take time.

2013. február 19. 09:42
György Barcza

"Some argue that this low deficit is unsustainable and only achieved because of the special taxes on some corporate sectors (namely finance, telecoms and energy), which amount to roughly 2 per cent of GDP. Would a larger deficit – and growing, equally unsustainable indebtedness – be better? Or – if austerity measures were introduced – should Hungary risk social and political instability, as seen in countries such as Greece. By introducing these taxes, the Orban government has ensured that the cost of building long-term stability is shared among those who made large profits before the crisis. We think this is only fair. Managing the country during the eurozone crisis without resorting to external help was, in reality, a great achievement – it proves that Hungary is capable of good, macro-economic management, whereas previously this country always found itself turning to the IMF.


True, investors were negative at the beginning of 2012, but they have since become positive on Hungary’s debt outlook – Hungary’s debt market performance was one of the best globally in 2012. Current criticism mainly focuses on the lack of growth due to last year’s recession. But the Czech Republic – previously a darling of those critics favouring the orthodox model – was not far behind Hungary in the size of its recession, and every other CEE country has also been hit by the Eurozone slowdown. Moreover, note that most of these countries are incurring growing public debt and decreasing employment. In short, the full picture is not just about growth. Hungary has had to tackle problems stemming from decades of economic mismanagement, which will take time. Success will come once the euro zone recovers and Hungary’s domestic demand is not blocked by the de-leveraging process."

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Összesen 21 komment

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Sorrend:
Yuing
2013. március 11. 18:45
Gyuri, mikor azt észt osztották miért nem álltál sorba ?
tarackos
2013. március 11. 18:30
Úgy látom Barcza kész hülyét csinálni magából a pártért és az elsőtitkár elvtársért. Legalább megéri?
saddlenode
2013. március 09. 18:42
"Would a larger deficit – and growing, equally unsustainable indebtedness – be better?" there's a question here ("Would a larger deficit be better?") and a (in my opinion false) statement, which are separate. a larger deficit does not necessarily mean growing indebtedness if it induces growth outpacing the growth in debt. there are (nonlinear) feedback loops in the system, which my amplify effects. so yes, a larger deficit would be better if the extra expenditures would be invested in the human capital of the country. it is true however that as long as the EU subscribes to the austerity mania, Hungary cannot do this on its own. so this is not Orban's fault that's true, although he seems to believe in the austerity religion even more than the EU/IMF whom he purports to fight. as for the "crisis taxes" these make up for the revenue lost by the introduction of the flat tax, that benefited only the upper 1/3 of all earners. cancelling both (flat tax + crisis taxes) might be a better option that is also fiscally neutral.
Charlie Chan
2013. március 03. 18:38
Oh, yes. Fidesz not only bought Financial Times, they also forced the resignation of teh Pope because he refused to beatify Orbán, right?
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