Economic euphoria, drastic tax cuts, more than 400 euros – to be expected for Hungary, analysts say

What could be the main economic trajectory throughout the course of the epidemic?

There will be no quick fix even if the vaccine is available in the first half of next year, so export markets are not expected to recover much, he said. Dávid Németh. K&H Bank According to a senior analyst, economies are likely to rebound further in the second half of the year. This year, people are expected to experience a recession of more than 6% and next year a growth of more than 5%, but there can be big differences between sectors.

We already expect a recession of more than 5% this year, partly due to the intensification of the second wave of the epidemic, but in general the outlook for 2021 is favorable, he said. Gergely Suppan, Takarékbank Senior analyst. He pointed out that the Hungarian retail industry has already held on, the industry is already showing momentum, and as many cars are bought in China to avoid public transport, this is already pulling the Hungarian vehicle sector, sales of companies present in Hungary are developing favorably.

Given that a significant part of society is already very hungry for life to return to normal, as soon as the vaccine is available and hope is created, he says that economic processes will improve dramatically. He said:

As soon as the transplant begins, there will be euphoria here.

He added that, in addition to the vaccine, the economy could be boosted in the second half of next year with the launch of EU funds. Therefore, “the second half of next year could be a turning point” and, in general, he said it could be “explosive growth next year.”

Zoltán Török, Raiffeisen Bank The senior analyst sees that the Hungarian recovery will eventually take the form of a pipeline, “but it will be a stem that rises very slowly.” He thinks that in a year we are still going to ask when we are going to recover from this crisis, because he believes that it is not yet in 2021. He pointed out that the data is very noisy because, for example, there is already uncertainty in the manufacturing industry again. Many companies are guessing how long this order expansion will take, and many companies in the service sector may still suffer permanently. Many people do not earn income this way, they cannot consume it, so the level of economic performance can only go back to 2022, where it was at the beginning of 2020.

What else should the government announce?

According to Zoltán Török, one of the reasons behind the government’s decisions is the preparations for the 2022 elections, so improving the morale of the population and buying votes is the main driver. For this reason, for example, there may be a reduction in PIT and overhead, but you will not be able to take the measures that are really needed. According to him, the increase in health care wages is “a very waistline thing, but it is firefighting” and he said:

We are only trying to protect a portion of the burning forest, but we are not sure of doing it correctly either.

According to Gergely Suppan, an extension of the Kurzarbeit would be absolutely necessary, at least selectively, affecting vulnerable sectors. He drew attention to the danger that if people leave the profession due to the permanent weakening of tourism in Budapest, tourists will return on time and there will be no high-quality care facilities, thus the reputation of the capital will deteriorate.

Budapest’s great reputation can turn to dust in seconds if no money is spent on tourism

stressed. He recalled that to his knowledge, employees of a patinated restaurant, for example, are trying their luck in the construction industry, and this may worsen the level of service when tourists return to Budapest.

Dávid Németh sees that the government is not expected to change the proven recipes, so, for example, the efficiency of tax collection can be maintained, since budget revenue is needed anyway. He also covered the health care transformation attempt, the current government’s big pay raise, but it reminded him that even a strong socialist government minister’s knife had been broken, so he was very curious to see if the government was really entering this conflict now. If so, it could make a big difference for the Hungarian healthcare system, but current measures do not yet show the concrete effect of this law today, he noted.

Will there be a change in life in three years compared to the situation before the epidemic?

According to Dávid Németh, humanity will quickly forget, so within 3 years there will be no major global upheavals in the field of climate protection, for example, as many can expect for now. According to him, the fear factor can persist in people for a long time, whether another virus reappears, so it can have a lasting effect on people’s life planning. Long-term home office expansion is a great opportunity, it can also alleviate the problem of labor shortage.

According to Gergely Suppan, there will be a lot of uncertainty about the full course of the epidemic, but in general, it can already be said that we will find a labor shortage again in 3 years, which could raise wages again, which is a problem regional.

According to Zoltán Török, in 3 years

it may already be above 400 against the euro

the forint, to which Suppan added in his final remarks that “I consider the forint to be extremely undervalued, as is the Hungarian stock market.”

Cover image source: Ákos Stiller, Portfolio