The full picture is not just about growth. Hungary has had to tackle problems stemming from decades of economic mismanagement, which will take time.
"Some argue that this low deficit is unsustainable and only achieved because of the special taxes on some corporate sectors (namely finance, telecoms and energy), which amount to roughly 2 per cent of GDP. Would a larger deficit – and growing, equally unsustainable indebtedness – be better? Or – if austerity measures were introduced – should Hungary risk social and political instability, as seen in countries such as Greece. By introducing these taxes, the Orban government has ensured that the cost of building long-term stability is shared among those who made large profits before the crisis. We think this is only fair. Managing the country during the eurozone crisis without resorting to external help was, in reality, a great achievement – it proves that Hungary is capable of good, macro-economic management, whereas previously this country always found itself turning to the IMF.
True, investors were negative at the beginning of 2012, but they have since become positive on Hungary’s debt outlook – Hungary’s debt market performance was one of the best globally in 2012. Current criticism mainly focuses on the lack of growth due to last year’s recession. But the Czech Republic – previously a darling of those critics favouring the orthodox model – was not far behind Hungary in the size of its recession, and every other CEE country has also been hit by the Eurozone slowdown. Moreover, note that most of these countries are incurring growing public debt and decreasing employment. In short, the full picture is not just about growth. Hungary has had to tackle problems stemming from decades of economic mismanagement, which will take time. Success will come once the euro zone recovers and Hungary’s domestic demand is not blocked by the de-leveraging process."