Budapest – A leading Hungarian economist is casting doubt on the government’s optimistic economic forecasts,citing a likely continued slowdown in EU funding and persistent inflationary pressures. Éva Palócz, CEO of Kopint-Tárki, detailed her concerns in a recent interview with Nepszava, suggesting a notable policy correction might potentially be needed to address the country’s economic trajectory. Her analysis comes amid ongoing debate over Hungary’s economic performance and as the nation prepares for potential shifts in budgetary policy following expected elections.
Hungary’s economy is unlikely to see a significant influx of European Union funding this year, with disbursements expected to continue at the slow pace of recent years, according to Éva Palócz, CEO of Kopint-Tárki. The assessment paints a cautious outlook for the nation’s economic prospects as it navigates a challenging global landscape.
While a rebound in export markets isn’t anticipated, Palócz noted that the launch of new production capacity – particularly within the automotive sector – offers some hope for improvement over the weak performance of previous years. However, she cautioned that external market conditions alone don’t fully explain Hungary’s economic struggles, pointing to the stronger performance of regional competitors facing similar headwinds.
Palócz’s comments, made in a recent interview, also addressed the government’s claims regarding inflation. “The government says they have defeated, overcome, and even trampled inflation. This is not true. Inflation defeated the economy; high prices have remained,” she stated. The persistence of elevated prices remains a key concern for consumers and businesses alike.
Investment has been in a dramatic decline for the past six years, Palócz highlighted. “When spending on EU funds was at its peak, before 2020, they grew very rapidly, but have been continuously decreasing ever since. The Hungarian economy doesn’t suffer from a lack of consumer demand, but from a lack of investment.”
She urged the government to broaden its focus beyond multinational corporations when seeking to stimulate growth. “The government should forget the idea that growth and investment depend exclusively on foreign, multinational companies. I am not an enemy of multinational companies; they play an important role in modernizing the economy, but each government must create an economic environment that allows domestic companies, SMEs, to invest, develop, and ultimately increase productivity.”
Businesses are currently adopting a wait-and-see approach, Palócz observed, a stance she understands given the anticipated shifts in economic and budgetary policy following upcoming elections. “The large amount of money the government is currently distributing will have to be recovered on the other side,” she added.
A policy adjustment is inevitable, and indeed necessary, Palócz continued. “These are easiest to achieve by reducing expenditure, and there is much more room for maneuver on this front, even if only considering wasteful spending. The recovery of illegally obtained assets has also been mentioned. And then there are the EU funds, the opening of which could inject a powerful boost into this struggling economy.”
While EU funding isn’t a panacea, Palócz emphasized its importance for restarting the economy. “One thing is certain: a change in economic policy is needed, and the current course is clearly unsustainable.”
The full interview is available here.
https://hvg.hu/gazdasag/20251103_kormanyvaltas-kh-szakerto-forint-kiigazitas-ebx
