Márton Nagy: the stagnation of GDP is temporary

By: Trademagazin Date: 2024. 02. 14. 13:18

According to the data of the Central Statistical Office, in the last quarter of 2023 it increased by 0.4 percent on an annual basis, while the performance of the Hungarian economy stagnated on a quarterly basis, and the GDP decreased by 0.8 percent for the year as a whole. In a statement on Wednesday, Minister of National Economy Márton Nagy stated in connection with the data that the visible stagnation in economic performance from the third to the fourth quarter is temporary and is mainly explained by weak external demand.

He pointed out that the stagnation of the GDP was largely caused by the weakness of markets of outstanding importance from the point of view of exports, and thus mostly of our most important trading partner, Germany. The German economy was stuck in recession, while the EU as a whole stagnated. All of this had an impact on the performance of domestic industry and, within that, on the decline of exports and thus foreign trade.

According to the minister, the unfavorable interest rate environment, the extremely high real interest rate, as well as the delay in the recovery of market lending, had a negative impact on the Hungarian GDP data. The head of the ministry stated that the high real interest rate discourages businesses from investing, and as a result encourages companies to save rather than develop and improve productivity. However, there is no sustainable and dynamic economic growth without a healthy credit market.