Mihály Varga: The Hungarian GDP may fall by 10 percent in Q2

English2020. aug 2.Növekedés.hu

The economy picked up slightly in June, but the GDP may still fall by 10 percent year-on-year in the second quarter and shrink by 5 percent in the second half of the year, exceeding the previously expected, now apparently over-optimistic forecast of 3 percent, the Minister of Finance said in an interview on Kossuth Radio.

Mihály Varga said that the biggest annual decline was measured in April, when it reached 20 percent. The economic downturn slowed down in May, and the trend turned around at the end of the month, so in June already signs of a slight recovery started to be visible.

The minister also explained that for this year, a general government deficit of 1 percent to GDP ratio had been forecast in the value of 488 billion forints, but by the end of June the deficit had already exceeded 1,800 billion forints, i.e. 3.8-4% of the GDP.

In the first half of the year the two determining factors were the 600 billion forints allocated for the coronavirus defence fund and the more than 1,100 billion forints for the economy protection fund.

According to Mr Varga, the deficit could grow even higher by the end of the year because rebooting the economy will require additional resources and there is also a chance of a second breakout of the epidemic.

He once again emphasized that the current crisis hit the country in a good economic situation, which is clearly shown by the 5 percent economic growth of last year and the more than 2 percent in the first quarter of this year.