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The Hungarian economy is preparing for reopening, at least in the countryside; the prime minister promised, if not the companies, that the state would give jobs to all who are now losing their jobs; Analysts expect a growing recession in Hungary. This is the weekly economic summary of hvg.hu.
Hungarian health care is also poised to treat massive illnesses, so the government is changing access restrictions, Viktor Orbán announced Wednesday night. For now, everything in and around Budapest will remain the same, but life will resume in the country. There, cafes, restaurants and hotel terraces can be opened without a time limit, open-air beaches and museums can be opened, and services can be provided without restrictions. However, events of more than 500 people cannot be held until August 15, meaning that much of this year’s festival season will be missed.
The government has also presented a bill to reduce the economic damage caused by the epidemic. Companies receive more development tax exemptions, some tax cuts remain after an emergency, and banks can withhold the money they pay as an epidemic tax for five years. However, the 13-month pension (more precisely week 53) is not yet visible in the first working material of next year’s budget, according to Gergely Gulyás, we have to wait until mid-May for the real proposal.
Orbán also made a bold commitment: all those who lose their jobs due to the crisis, if they are not from companies, and after the state, will have a job offer within three months. What this means has yet to be detailed, in any case, if the government were preparing for a gigantic public works program, it would not be an easy task, since now the people who could be employed in the previous program would lose their jobs. Until then, the CSO had published the data: in the first weeks of the epidemic, in March, unemployment increased by 1 percentage point compared to the previous year. This bizarre number stemmed from the fact that of the 56,000 people who lost their jobs in March, 54,000 were unable to register as unemployed and / or were unable to get a job within two weeks, meaning they are officially inactive, not unemployed.
The Finance Ministry is also preparing for next year by wanting to perpetuate the special retail tax temporarily introduced due to the epidemic situation, which is why it has submitted a bill to the National Assembly. Based on the current position, all retailers, from gas stations to bookstores and pharmacies, could pay for this.
The special tax also applies to foreign companies. To this, the relevant communication from the Ministry of Finance adds that “foreign online business multinationals (such as Amazon, Wish, AliExpress) cannot escape the obligation to pay business taxes either.” Whether this is accomplished in practice is the least questionable. And also, what does this have to do with the coronavirus? The government won a lawsuit before the Court of Justice of the European Union a few days before the emergency, which was precisely about the compatibility of this special tax with EU legislation. I mean, I was expected to use it again sooner or later.
Meanwhile, companies are working on how to deal with the crisis. Mol postpones the payment of dividends, and Bosch will not close its Hungarian plants despite the downsizing, because there is still demand for the products manufactured here. Hungarian Ikea stores will open from May 5 and work has resumed at the Mercedes factory in Kecskemét. It also turned out that approximately 200 companies have so far requested a salary supplement from the state. True, at least before Mother’s Day, the florists could have opened. And of course, in the coming months, business people closest to the head of government may be comforted with hundreds of billions of forints in public procurement and tenders. But half of the workers are sent from the hotels in Lőrinc Mészáros.
The airlines are preparing to resume work. Wizz Air will fly to 16 cities from Budapest in May, and KLM will resume the Amsterdam-Budapest flight. No wonder they are eager to leave: Budapest airport, for example, reported that the loss exceeds 99 percent every day.
Picture of the Week: He filled it with over a thousand pairs of empty shoes. The streets of The Hague, the Dutch extinction rebellion. Climate activists drew attention to the lack of citizens in the decision-making process in which they voted to help large polluting corporations.
© Facebook, Extinction Rebellion NL, Romy Fernandez and Catharina Gerritsen
Working hours can be reduced to 4 hours by mutual agreement, but cannot exceed 12 hours per day. There are very few things an employer can do unilaterally: under the new rules, like ordering work from home or applying a 24-month work time frame. Regarding the leave: by default, the employee has 7 days of his own, the rest can be published by the employer. It is important to note that both parties must notify said intention 15 days in advance, this can only deviate by mutual agreement.
Magyar Nemzeti Bank is also involved in crisis management. Its latest move is to launch its government securities purchase and mortgage bond programs beginning May 4. According to the central bank announcement, the bank press will function for as long as necessary; After the purchase of exactly one billion forints in government securities, the program will be reviewed.
© MTI / MTVA / Gábor Juhász
According to the explanatory memorandum to the Communication, the Monetary Council attaches particular importance to “influencing longer-term monetary conditions of the yield curve”. That is, by generating additional demand, they suppress returns.
The prospects for the Hungarian economy are also worrying abroad. As an extraordinary step, the Hungarian debt rating was downgraded from positive to stable by Starnard & Poor’s credit rating. In addition, the BBB / A-2 rating was maintained. As they write in their communication, they expect the Hungarian economy to shrink by 4 percent in 2020 due to the consequences of the coronavirus epidemic. Meanwhile, unemployment could rise to 7 percent. In April, the GKI business cycle index also dropped by almost 30 points, an unprecedented rate, also, of course, due to the epidemic.
And Bank of America estimates the Hungarian economy could drop 5 percent this year instead of 4. According to the analysis, the state will have to borrow 3 percent of GDP later this year, and domestic demand it will not be enough to sell all the Hungarian government bonds nationally. The Hungarian government’s plan to have a 2.7 percent budget deficit is overly optimistic. It overestimates how much GDP will grow in 2020 and is based on too low fiscal stimulus plans, they wrote.
Not only Hungary is in trouble. The European Union would need to adopt a stimulus package worth around € 1.5 billion to mitigate the negative effects of the coronavirus epidemic, said EU Commissioner Paolo Gentiloni. Germany is preparing for an economic recession as big as Annex II. It has not been since World War II. In the autumn a plan will be presented to the German government so that anyone can work from home if they so wish and can fulfill their obligations without being present at work. The year of the French economy has also started terribly, the continuation could be even worse. And the Italian Prime Minister spoke about not being able to continue, the economy needs to be restarted.
© AFP / Romy Arroyo Fernández
The economy of the EE. USA It fell 4.8 percent in the first quarter, and analysts no longer consider the 30 percent drop to be unthinkable. In comparison, Washington is optimistic: The U.S. economy could rebound in the summer if production stops due to the coronavirus epidemic resuming in the next two months, Finance Minister Steven Mnuchin said. In the member countries of the Asia-Pacific Economic Cooperation (APEC), the organization’s secretariat expects a 2.7 percent decrease in GDP this year.
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