Economic policy dilemmas

According to a forecast by GKI Gazdaságkutató Zrt. and Erste Bank, the Hungarian economy will stagnate in 2010 and a moderate growth is expected only in the second half of the year. In Hungary, the economic recession has been taking place for seven quarters now. In 2009, the GDP fell by 6.2 percent, consumption diminished by 6.7 percent and investments were down 6.5 percent. In 2010, industry and export are expected to grow already in the first six months, but unemployment and consumption downturn will peak in the same period. Hungarian economy is mainly influenced by world and European Union trends, therefore in 2010 the new government’s impact will be smaller than expected – obviously it could be vastly influential from next year.

The new government’s economic policy cannot ignore the expectations of the international monetary sector and institutions: a strict fiscal and revenue policy must be implemented, keeping the focus on decreasing the budget deficit. In this economic policy a patriotic approach might appear, using state funds to support Hungarian SMEs, farmers and state-owned companies.