There are more questions than answers: what do Eurostat’s latest consumption data about Hungary actually reveal?

Ahead in GDP, behind in consumption

According to the latest Eurostat data, Hungary is ahead of six EU countries in terms of GDP per capita measured at purchasing power parity, while it is among the leaders in terms of consumption. However, it would be a mistake to draw a quick conclusion from this – economic development cannot be described with a single digit, no matter how much both sides would like to use this to justify themselves.

According to the ruling party’s interpretation, the data are evidence of catching up, while according to the opposition narrative, Hungarians are still among the poorest in the EU. However, the reality is much more nuanced.

Consumption, wealth, development: not the same

The different statistical concepts – GDP, consumption, development, wealth – are not substitutes for each other, but complementary metrics. As Gábor Regős, Chief Economist at Gránit Fund Management, pointed out: if we want to know who is the poorest, we need to use the poverty indicator; if we want to find the richest, income data will help, although they are no longer sufficient to map the wealth situation. GDP shows the performance of the economy rather than the quality of life of the population.

Why don’t we consume more?

The consumption of the Hungarian population is shaped not only by income, but also by a number of other factors. The crises of recent years – Covid, energy crisis, inflation – have taught households to be cautious. The willingness to save has increased, not necessarily because there is abundance, but because of uncertainty. Access to one’s own home also prompts many to save – but this expenditure does not appear as direct consumption.

On the other hand, the role of public services is also important: if a country has more publicly funded education, healthcare or housing, it reduces direct household consumption. In other words, it is not a matter of not “having enough”, but of spending through other channels.