First quarter shock has Hungary preparing economic stimulus package

By bne IntelliNews May 26, 2016

Alarmed by poor GDP growth in the first quarter of 2016, the Hungarian government is preparing an economic stimulus package, local press reported on May 26.

It seems that Hungary’s 0.9% GDP growth reported in Q1 - representing the slowest rate of expansion since Q1 2013 and second lowest in the EU - did not only surprise the market, but also the Hungarian government. Budapest has targeted 2.4% growth for this year.

That shock pushed Prime Minister Viktor Orban to call “crisis meeting” on May 18 not long after the publication of the latest GDP data reports Figyelo. “Representatives of the cabinet were coming and going ... to explain the data that showed contraction on a quarterly basis and moderate growth on an annual basis,” the outlet wrote.

Agnes Hortung, state secretary in charge of finances told the newspaper that there have been several consultations in the government about an economic stimulus package. However, she did not provide much information about the planned measures.

Janos Lazar, head of the Prime Minister’s Office, suggests that the government plans to support economic growth by speeding up preparations for state projects and boosting the investment market. However, the latter appears to be a reference to a plan to revive activity on the sleepy Budapest Stock Exchange that has beenin place for some months.

"The next step would be helping small and medium-sized enterprises go public,” Hortung confirmed. The Magyar Nemzeti Bank, which bought full control of the BSE in November and has pledged to revive the bourse following years of decline. The central bank put special emphasis on attracting SMEs to raise capital on the exchange in a strategy document published in March.

Lazar also announced that state-owned development bank MFB will launch a new program to give interest-free loans of HUF1-600mn (€3200-1.9mn) to SMEs.

Related Articles

Hungarian branch of Bucharest listed Digi to buy Invitel Tavkozlesi in €140mn deal

Bucharest listed Digi Communications announced on July 21 that its Hungarian subsidiary, Digi Tavkozlesi es Szolgaltato, has signed an agreement to acquire Hungarian broadband and telephone provider ... more

Czech judiciary denounces Poland's move to end separation of powers

Senior Czech judges on July 21 denounced Poland's judicial overhaul as an attack on the rule of law. With big street protests in the Czech Republic's neighbour seemingly gathering momentum – 120 ... more

Hungary's MOL strikes licensing deals essential to $1.9bn petrochemical expansion ambitions

Hungary's MOL announced on July 20 that it has struck licensing deals with Germany's Evonik Industries and Thyssenkrupp that will be essential in its plan to roll out a $1.9bn investment in ... more