Government communication yields no results, Hungarian economy collapses
Although the government claims that the Hungarian economy is growing at an unprecedented scale, the figures do not support Prime Minister Orbán’s communication. According to World Bank data, Hungary has fallen behind in the last 25 years in the region.
According to 24.hu, the Orbán administration attempted to sell Hungary as one of the most economically prosperous European countries. Meanwhile, inflation is at a 14-year high, the forint is weakening and the state budget is struggling with a historically high deficit.
According to World Bank data, Hungary took two places in the Central and Eastern European region between 1995 and 2020.
The institution compared the economic development of 17 Central and Eastern European countries, taking the GDP per capita.
The start date is 1995 because it is from the date that the World Bank has data for all countries in the UNECE region.
In 1995, Hungary was in fifth place if we take the GDP per capita. Slovenia was first in the ECO region, while the Czech Republic came in second. However, the average Slovenian produced twice as much GDP as the average Czech ($ 10,730 versus $ 5,824). The third was Croatia, the fourth was Slovakia and the fifth was Hungary (USD 4,495 per person). It is interesting to note that the Polish GDP per capita was only 82 pc of the Hungarian GDP. However, thanks to liberal reforms, Warsaw has been one of the fastest growing economies in the CEE region for the past 25 years.
Poland grew by 150 pc between 1989 and 2019. In the meantime, this rate was only 50 pc in the case of Hungary.
Estonia was far behind Hungary in 1995. But in 2020 Tallinn became the second most developed country in the region. An average Baltic state citizen earned more than $ 23,000 in 2020. Experts say Estonia has benefited a lot from its liberal education and economic reforms, as well as the digitization of the state. Meanwhile, the Hungarian GDP per capita only increased to reach 15,900 USD, which is only 69 pc of the Estonian number.
However, not only Poles and Estonians preceded Hungary. Latvia and Lithuania have done so too.
24.hu gave a detailed analysis of the milestones of Hungarian economic development over the past 25 years. In 1995, parliament accepted the Bokros package, named after the socialist liberal economy minister Gyula Horn. The social effect of the package was catastrophic, but it put the Hungarian economy on the path to growth. 24.hu argues that Hungary did the same as Poland and Estonia, but the reforms came too late.
Hungary’s position did not change in the second half of the 90s and early 2000s. However, in 2002 Hungary came in third place. This meant that Budapest had even preceded Croatia and Slovakia. 24.hu says that the increasing expenditure of
the first Orbán and Medgyessy governments broke the budget balance.
Therefore, the Gyurcsány Cabinet (2004-2009) encouraged foreign currency loans to replace state-backed home loans introduced by Viktor Orbán previously. Even Hungary’s central bank did not say the process was risky. However, when the forint exchange rate collapsed, people with a foreign currency loan found themselves in a death trap. In 2007, the amount of this loan reached HUF 272 billion.
The result was that 61,000 families struggled to repay their loans. Their burden was so heavy, and there were so many people affected that they needed help from the state. In addition, the Hungarian public debt fell from 53 pc of GDP (2002) to 80 pc (2010). After Gyurcsány’s speech in Őszöd led to clashes in 2006 between protesters and police, Hungary began to back down. In 2007, Hungary was seventh.
In 2009, the list was: Slovenia, Czechia, Slovakia, Estonia, Croatia, Hungary, Latvia, Lithuania, Poland and Romania.
Additionally, in 2012 Hungary became 9th on the list in the region. Poland, Lithuania, Latvia and Croatia have all preceded the country. It was then that the reduction in utility charges came in and saved the Orbán administration.
In 2015, Hungary returned to seventh place in the region. This has not changed since then.
Source: 24.hu, World Bank