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The global economy is slowing down but not in recession, Finance Minister Mihály Varga said at a conference of economists in Nyíregyháza, in north-eastern Hungary, calling for maintaining fiscal discipline in the Hungarian economy and keeping up the country’s recent high investment rate. The minister outlined a proposal package aimed at ensuring the continued sustainable growth of the Hungarian economy. He said fiscal overspending and using up the reserves should be avoided, and workforce reserves should be mobilised while maintaining the current 25% investment rate. The forint exchange rate should remain predictable, policy proposals should be implemented and the competitiveness of the SME sector needs to be improved, Varga added. Economic policy measures have played a great part in strengthening the Hungarian economy, which means that in spite of the global effects, economic growth is expected to continue, he said.

Assessing the performance of the Hungarian economy in the first half of this year, Varga said the slowdown of the German economy does not yet have its effect felt, which shows that Hungary’s vulnerability to external risks has lessened. Of the 5.1% GDP growth achieved in the first half, 2.4% was generated by domestic factors such as household growth, 1.6% by government policy measures, 0.9% by external demand, with European Union resources contributing just 0.2% to growth, the minister said. It is also a positive sign that participants of the Hungarian economy now have significant reserves compared to the time of the 2008 crisis, Varga said. Households and businesses have a low level of indebtedness, the bank sector has a strong shock-absorbing capacity, the general government budget has a high level of reserves, the ratio of the government debt denominated in foreign currency and held by foreigners has been reduced, and employment has exceeded 70%, he added.