Hungary is growing at a “feistier rate” than its European peers and its employment rate has jumped, the economy minister said, commenting on a new EC forecast. The European Commission reckons Hungary’s economic growth rate this year will quicken to 3.5% compared with its previous forecast of 2.6 The wage deal struck at the end of 2016 had been factored in to the commission’s new projection, the economy ministry said.
The government targets a rate of economic expansion of 4.1% this year and 4.3% in 2018. The ministry said that major tax cuts and wage rises may end up boosting real wages by 40% over the next six years. The gap between Hungarian wages and the European average will begin to narrow while the reduction in tax burdens on businesses will bring Hungary to the same level as its regional competitors, it said. It is clear that Hungary’s low tax rate is proving to be a real factor when it comes to companies deciding whether to make investments. Besides stimulating the economy, the low tax rate also helps to whiten the economy, it added. The commission reckons that Hungary’s growth rate will be 3.2% in 2018, well above the European average.