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August 21, 2024 – 08:59
“It would be important to restart economic growth this year, but at the same time it must be seen that the dissolution of the precautionary motive that inhibits consumption will take longer, more patience is needed,” said Minister of National Economy Márton Nagy in the In his interview with Index. Like Márton Nagy Viktor Orbán and Kristóf Szalay-Bobrovniczky after that, he joined the ranks of government members who accepted the big interview in the newspaper.
In the interview, the Minister of National Economy talked about, among other things:
- GDP and consumption growth are also below expectations, but even with this performance, we belong to the first third of the European Union.
- This year, economic growth may be around 2 percent, next year 4 percent can be targeted. The war, on the other hand, continues to hinder the restart of the economy, and peace is primarily necessary for GDP growth.
- It is important that all social strata benefit from the economy, during the restart the focus should be on low-income rural families and young people, and in the corporate sector on domestically owned small and medium-sized enterprises.
- In February, almost HUF 400 billion was left in people’s pockets in the interest paid on Premium Hungarian Government Bonds. This was not spent, but reinvested.
- Those with below-average incomes have no savings, the increase in real wages should appear as immediate consumption, but for now it does not. “It’s as if the middle class and those with below-average incomes have become even more cautious.” The strong “precautionary motive” reflects the population’s fear, which is understandable due to external crises. And the persistence of the precautionary motive is bad.
- But the interest rate effect is also very strong. This year, the government is paying a lot of interest on government bonds to the population, 2 percent of GDP.
- The population does not consume “extra” from the rising wages, but rather saves for the capital of the home loan or spends on the repayment installment. Housing is therefore more important to them than restoring consumption.
- The economic cabinet prepared an action plan called the “peace budget”, which would like to focus on SMEs, families, young people, and rural residents.
- Exports are dragged down by the export of vehicles and batteries, but all over Europe there are problems with the transition to the electric vehicle industry. Brussels made a mistake by not coordinating the transition of countries to electric cars, causing uncertainty for consumers and the industry. The Ministry of National Economy, on the other hand, prepared a pan-European action plan to speed up the transition to electric cars.
- Budgetary policy must follow the cash-flow approach, for this purpose expenditures are rationalized and public investments are postponed. The economic cabinet examined the possible rescheduling of investments over one billion forints from 2024 to 2025-2026, which means a cut of 645 billion forints.
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