According to the European Commission’s summer forecast, the EU economy could expand by 4.8 percent this year, so if GDP growth of more than 7 percent could have a 2 percentage point growth advantage this year as well.
Daniel Molnar, chief analyst at End of the Century Economic Research, told VG. The expert added that if similar growth continues to the pre-crisis period, the Hungarian economy will be able to catch up with another old member state, Portugal, within a few years. He emphasized that although a faster recovery of the EU will also help Hungarian growth, the pace of economic recovery in Hungary and in the EU is much more important. The expert stressed that the goal is to reach the previous level of emissions as soon as possible and to ensure that the recovery takes place in a sound structure, that is, most sectors leave the effects of the crisis behind as soon as possible.
At the moment, the recovery is proceeding at a reasonable pace, at least as evidenced by the fact that thanks to the outstanding growth in the second quarter, the performance of the economy has already reached the level of the end of 2019, and even slightly exceeded it by 0.2 percent. Among the V4s, Poland leads us (GDP is 0.8 percent higher than it was in the fourth quarter of 2019), while the Slovakian economy lags behind at 2.1 percent, the Czech Republic trails behind at 5.1 percent, and the output EU GDP too. 2, 6 percent.
Achieving pre-pandemic levels on an annual basis will require an increase of 5.3 percent in 2021, which can be easily predicted according to current projections.
Daniel Molnar pointed out this.
According to the European Commission’s forecast in July, the Hungarian economy could expand by 6.3 percent this year and by 5 percent next year.
Although data for 2021 is the third highest in the European Union, today most analysts expect growth of more than 7% (Takarékbank reports 7.7% GDP growth by 2021). The question is what will suffice for this, and how the catch-up might develop in the future. In this regard, the turn-of-the-century analyst explained that we had already surpassed Greece in 2015 and have since moved away from it. According to the data for 2020, Portugal is still ahead of us (77.4 percent of GDP per capita in PPP compared to the EU average, while Hungary is 74.2 percent).
If pre-crisis growth continues at home and there is no significant turnaround in Portugal — after a 7.6 percent decline last year, Brussels expects only 3.9 percent growth this year, which could accelerate to 5.1 percent next year — then There is a realistic chance that we will soon bypass this southern European country too
The expert confirmed.
Among the western countries, Spain comes in the ranking with an average of 85.9 percent, so here the lag is more significant. At the same time, the analyst emphasized that we need not only to look at the relative situation of the Hungarian economy, but also so that growth is stable and the catch-up continues.
At the same time, dynamic expansion also entails an increase in inflation, which is controlled by monetary policy instruments through accumulated government securities and low interest rates. However, the researcher warned that failure to initiate economic growth on a permanent basis could lead to the risk of stagflation, which would be more difficult to overcome.
