The budget deficit (1.9 percent of gross domestic product) has not been at such a low level for 10 years and according to forecasts it will remain below 3 percent next year.

The Ministry of National Economy’s professional opinion confirms that neither the capital increase at the Hungarian Electricity Works MVM nor the resources provided to credit unions will affect this year’s budget balance, despite the fact that consumption and VAT incomes have fallen as a result of record low inflation. At the general parliamentary debate on the proposed budget control act, State Secretary of the Ministry of National Economy Zoltán Cséfalvay highlighted that the Hungarian budget deficit can be safely sustained thanks to the public employment programmes and the measures included in the Széll Kálmán structural economic reform plan. The State Secretary called the achievements particularly significant in light of the fact that last year’s global economic environment was less favourable and the eurozone was again experiencing recession.

The Ministry attributes the persistent low level of the budget deficit to the significant reserves of the Country Protection Fund as well as to the improving performance of the Hungarian economy. In connection with the former, the Government and international financial analysts are of the same opinion, stating that the 2013 upturn in the Hungarian economy’s growth will continue in 2014, meaning that economic growth could surpass 1.4 percent. According to the third-quarter forecast of Capital Economics, one of the City’s biggest financial-economic analysts, the Hungarian economy will grow by 0.5 percent this year and growth will accelerate to 2 percent in 2014. The short-term forecast issued by the London-based analyst department of Bank of America-Merrill Lynch calculates with an even better outlook, according to which the Hungarian economy could grow by 2.6 percent in 2014 as a result of domestic demand reaching its lowest level after 5 years of shrinking, and budgetary and monetary policies all focusing on stimulating growth. Analysts from Goldman Sachs say last year's fourth quarter marked the lowest point of growth in Hungary but since then the economy’s growth prospects have improved significantly and domestic demand has also seen a marked upturn.

(Ministry for National Economy)