Gábor Kovács

Gábor Kovács

The central bank president outlined what the government could have done better in 2020.

Magyar Nemzeti Bank (MNB) was very optimistic in its forecasts earlier in the year, Governor György Matolcsy said at a press conference after the last Monetary Council meeting in 2020. According to Matolcsy, the central bank was optimistic based on two assumptions:

  • There will be no second wave of the epidemic,
  • The government can boost public investment and community consumption.

None of them entered.

The economic recession is over and must be taken into account for the future:

  • The second wave of the epidemic alone pushed the Hungarian economy back by 3 percent, meaning it is responsible for 3 percentage points of the recession from 6 to 6.5 percent.
  • Community (state) consumption should have increased, as in Germany, which the Hungarian government could not achieve. This equates to a percentage point decrease.
  • There has been no boost to public investment. The result is a recession 1.4 percentage points higher.
  • There was “malpractice” in the housing policy, Matolcsy said. The increase in VAT on new homes to 27 percent was this error, without which the decrease would have been 0.5 to 0.6 percentage points lower. [A kormány 2021-től visszaállítja az 5 százalékos áfát – a szerk.]

Countries like Romania and Poland, which have achieved higher growth than Hungary in the last ten years, have now been able to register a lesser decline in the crisis. Lessons need to be learned from this, the central bank president said.

Matolcsy presented 1 + 3 more conclusions:

  • “The future is always different from the past.”
  • The good things about growth over the last ten years may not be enough for the next ten years. You will need more.
  • Structural changes will be necessary, which will also have to be advanced. [2022-ben országgyűlési választás lesz Magyarországon, a kormányok jellemzően nem szívesen fognak reformokba a ciklusok végén – a szerk.]
  • The economic and public balance should not be forgotten. According to Matolcsy, the restoration of growth is expected by 2022, but from there the balance must be restored, the public debt must not be forgiven. “Debt always remains debt.” [A Pénzügyminisztérium a minap árulta el, hogy 2021-re is a vártnál jóval magasabb, a GDP arányában 6,5 százalékos hiányt tervez.]



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