Hungary’s economy in 2018: unemployment down, wages up and GDP growth among EU’s leading economies

Once dismissed as “unorthodox,” economic policy in Hungary has helped an economy once on the brink of default to make a dramatic turnaround. The economic success story continued in 2018 as the country approaches the second highest GDP growth in the EU, along with record-low unemployment rate and rising wages. As we approach the end of the year, here’s a quick summary.

Hungary’s jobless rate has fallen to record lows. The average, three-month jobless rate has dipped to 3.7 percent. In November, for the first time, the number of people employed in Hungary exceeded four and a half million, which means that more and more people are moving into the active labor market from the existing labor force.

Besides creating jobs, maintaining a healthy society is another one of the government’s top goals. Committing 14.1 billion HUF in 2019 and another 79.4 billion HUF in 2020 on a 72 percent increase of healthcare wages, new impetus will be given to strengthening the Hungarian healthcare system.

According to the latest data of the Central Statistical Office (KSH), Hungary’s third-quarter GDP has grown by an annual 5 percent, which is about 2.5 times the EU average and puts the country at second place among all member states.

This robust performance has not gone unnoticed. The London-based emerging market economists at Morgan Stanley also reported positive data, upgrading their GDP forecasts to 4.6 percent for this year and 3.8 percent in 2019.

Leading credit rating agency Moody’s also affirmed Hungary’s Baa3 ratings with a stable outlook.  The key drivers behind the rating were the government’s commitment to gradual fiscal consolidation, robust growth and “overall supportive institutional capacity”. They projected that Hungary’s GDP growth would reach 4.3 percent in 2018 and 3.4 percent in 2019.

Last but not least, the OECD also raised its GDP growth forecasts for Hungary in the November edition of its Economic Outlook report. Compared to the previous Economic Outlook released in May, the new report predicts that next year’s growth will reach 3.9 percent, up from their earlier forecast of 3.6 percent.

Prime Minister Orbán believes that over the next few years, the countries of Central Europe will become the engine of Europe’s economic growth, and the government’s goal is to help Hungary reach its full potential.