Hungary must offer support to ensure growth of 5.5% in 2021, says Orban

Hungary's government will have to offer support to ensure the economy expands by 5.5% this year, Prime Minister Viktor Orban said on Tuesday, adding that it would be unrealistic to expect faster growth. Orban, who faces his first competitive parliamentary election next year since taking power in 2010, said he saw particular problems in the construction sector, where raw material prices have surged.

Hungary's government will have to offer support to ensure the economy expands by 5.5% this year, Prime Minister Viktor Orban said on Tuesday, adding that it would be unrealistic to expect faster growth.

Orban, who faces his first competitive parliamentary election next year since taking power in 2010, said he saw particular problems in the construction sector, where raw material prices have surged. He said this risked undermining one of his key economic policies, namely a 3 million forint ($10,151) grant for families to renovate their homes, and said his government would need to step in to address the issue.

"I would like to advise everyone to be cautious," he said, saying his government would need to take up to 20 "powerful" steps in coming weeks to give the economy additional impetus, although he did not give detailed outlines of those plans. "The economy will not grow by 5.5% by itself," Orban said, adding: "To those dreaming of 6% to 7% growth, I would advise them to get back to reality.”

Official government figures forecast growth of 4.3% in 2021. But economists expect faster growth and one of Orban's top economic aides, former central bank Deputy Governor Marton Nagy, said earlier this year that 5% to 6% growth was attainable. The central bank, which raised its base rate by 30 basis points to 0.9% last week to combat growing price pressures as the economy roars out of the coronavirus crisis, forecasts 2021 economic growth at 6.2%, after previously giving a range of 4% to 6%.

Orban has promised a $2 billion income tax rebate for families based on securing growth in excess of 5.5% this year. Analysts in a Reuters poll last month projected 2021 growth at 6.6%. ($1 = 295.55 forints)

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