Hungary: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Hungary

International Monetary Fund

No 2019/357, IMF Staff Country Reports from International Monetary Fund

Abstract: This 2019 Article IV Consultation discusses that in an increasingly uncertain global economic environment, Hungary’s growth registered one of the highest rates in Europe in 2018. The economy now appears to be running above capacity and wages are growing rapidly amid historically low unemployment. It is thus likely that growth will slow down over the medium term. Supply-side reforms can help sustain the momentum. Policies have reduced vulnerabilities substantially; however, measures to support the targeted fiscal consolidation could be more ambitious to ensure that room for fiscal policy manoeuvre is rebuilt. Wages outstripping labor productivity growth, slower export growth, and shortcomings in the business environment for small and medium enterprises call for invigorating structural reform efforts. Improvements in competitiveness are needed to sustain rapid income convergence and address demographic challenges. The government’s competitiveness program contains important elements. Focus should be on improving the business environment, enhancing the legal and regulatory framework, and increasing labor force participation.

Keywords: ISCR; CR; headline inflation; MNB; rate; holding; tolerance band; liability positions vis-à-vis nonresident; monetary policy stance; loan product; exchange rate arrangement; Inflation; Labor markets; Global; Europe (search for similar items in EconPapers)
Pages: 54
Date: 2019-12-05
New Economics Papers: this item is included in nep-mac
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