Government standing by 2016 growth target, says economy minister

Budapest, December 28 (MTI) – Hungary’s government will stand by its assumptions in the 2016 budget for the time being, Economy Minister Mihály Varga said in an interview with MTI, though he acknowledged that growth trends remained a “big question” for next year.

Hungary’s economic growth is expected to exceed the European Union average next year and the government does not wish to amend the 2.5 percent target in the budget, Varga said, adding that the government’s forecast for inflation next year remains 1.6 percent.

The minister noted low raw material and oil prices as an upside risk, but added that the resulting impact on the economies of Turkey, Brazil and South Africa could weigh on investors’ assessment of other emerging market countries, such as Hungary.

The minister noted that the forint weakened after the Federal Reserve’s rate hike in mid-December, although to a lesser extent than other regional currencies. He said Hungary’s roughly 3 percent GDP growth and stagnating inflation are signs that the government’s reforms are working.

Varga said a recently introduced system that tracks road haulage shipments in Hungary would be “fine-tuned” next year, while more businesses would be required to use tills connected directly to the tax office, further boosting tax revenue. A government crackdown on tax fraud has reduced the scale of Hungary’s shadow economy from around 30 percent to 20-22 percent of GDP, he added.