GDP shrank only in Hungary in the EU in Q1; FM Szijjártó says new industrial capacities will give big boost

Hungary’s GDP stagnated in the first quarter compared to the same period a year earlier, a first reading of data released by the Central Statistics Office (KSH) on Wednesday shows.

GDP shrinked only in Hungary in Q1

Adjusted for seasonal and calendar year effects, GDP edged 0.4pc lower. KSH said services had a positive impact on GDP, while performances of the industrial and construction sectors weighed. In a quarter-on-quarter comparison, GDP inched down a seasonally- and calendar year-adjusted 0.2pc. KSH will publish a second reading of the data on June 3. According to portfolio.hu, GDP contracted only in Hungary among the EU member states.

Economy minister remains positive

National Economy Minister Márton Nagy said the government was working to to ensure the “biggest economic growth possible amid the negative external environment in Europe” in a statement issued by his ministry after the release of the data. He added that the government was drafting a budget that would counter the effects of the war, pointing to a tax reduction programme for families raising children and the Demján Sándor Programme for scaling up SMEs.

He said the financial burden of the war and the possibility of Ukraine’s future accession to the European Union were negatively impacting Hungary’s economic outlook. “As long as the war continues and sanctions remain in place, Europe and Hungary will pay the price of the war,” he added.

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150 new factories

Nagy said a scheme announced earlier to set up 100 new factories would be expanded to 150 manufacturing bases. He said a government-mandated cap on markups on some food products would be extended to groups of non-food products, too, boosting household consumption. Increasing construction sector output and demand in the tourism sector are a “positive sign”, he added.l

Nagy said the government was sticking to its plan to achieve the highest economic growth possible in 2025 and 2026.

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New industrial capacities to give Hungary’s GDP big boost, says FM Szijjártó

Hungary’s GDP will get a boost as big new industrial capacities are completed, Minister of Foreign Affairs and Trade Péter Szijjártó said in Budapest on Wednesday. In a statement issued by his ministry, Szijjártó said production at manufacturing investments by BMW and CATL would start this year, while construction of BYD’s factory was progressing “at full steam” and work on Mercedes’ second plant would soon enter “the final stretch”.

Answering a question at a press conference on a release of first-quarter GDP by the Central Statistics Office in the morning, he said Hungary’s GDP would grow “by leaps and bounds” when those plants started production. The impact of investment agreements signed in recent years will be apparent in GDP data in the coming quarters, I can assure everybody of that,” he added.

EPP prolonging the war in Ukraine

In response to questions, Szijjártó protested sharply against efforts by the European People’s Party’s to “prolong the war” and fast-track Ukraine into the European Union. “The EPP is the most pro-war and pro-Ukraine party group in Europe. The president of the EPP is one of the most pro-war and pro-Ukraine politicians in Brussels and on the European political scene in general,” he said.

“We support peace efforts, not efforts to prolong the war, and we rejected Ukraine’s fast-tracked EU accession because for us that would mean flooding the Hungarian labour market with Ukrainian workers and the Ukrainian mafia would use Hungary as a gateway. Thanks but no thanks! We say no to the EPP’s pro-war and pro-Ukraine policies,” he added.

Ukraine only rhetorically committed

Regarding Tuesday’s visit by Olha Stefanishyna, Ukraine’s deputy prime minister for European integration, Szijjártó said he recently agreed with his Ukrainian counterpart that the two countries will both assign a delegation to review the situation of ethnic Hungarians in Transcarpathia.

“We have designated Levente Magyar, the deputy foreign minister, and they have assigned their deputy prime minister. So the heads of the two delegations met for talks. And I sincerely hope that the Ukrainians will this time take the issue seriously, because experience from the past decade suggests otherwise,” he said.

“Over the past ten years I have worked with four different Ukrainian foreign ministers on this matter, and although they were always rhetorically committed to the issue, their actions always turned out to be the opposite,” he added.

“We of course continue to welcome the talks and continue to take part in the consultations, but now we should not just talk about this matter; the Ukrainians should take action… The situation is not complicated: there was a legal state of affairs until 2015; that is what should be restored. So they need to do the opposite of the laws that have been passed since 2015, taking away the rights of the Hungarians,” Szijjártó concluded.

Former PM Gyurcsány’s DK: Hungarian economy ‘in brutally poor state’

Hungary’s economy “is in a brutally poor state”, an opposition Democratic Coalition (DK) politician said on Wednesday, commenting on a fresh release of Central Statistical Office (KSH) data showing a 0.4 percent contraction in the first quarter.

“Hungary hardly emerged from a technical recession before falling back into it again,” László Varju, the party’s deputy chairman, told an online press briefing, adding that the national economy minister had signalled growth of 0.5 percent on April 1.

He blamed the government for “destroying the forint” and allowing wages and pensions to depreciate, adding that Hungarian small businesses had been left by the wayside while public money was spent on foreign multinationals.