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Macro-economic sustainability and justice
The conditions for sustained economic growth are missing, while income disparities are on the rise. Government debt is not reduced, but the structure is changing. The level of social expenditures is low, while inequality among generations is increasing. Economic activity is rising somewhat, though only as a result of the public works programme and the increase of people working abroad.
The 2008 crisis strongly pushed the Hungarian economy backwards, more than the other countries in the region. The GDP has still not reached its pre-crisis level, while the country is increasingly lagging behind the reference countries in terms of GDP per capita.
Inequality has been growing in Hungary over a period of several years. The flat tax, drastic cutbacks in the social welfare system, and high VAT rates all strengthened this process.
Based on the data, one might think that the level of Hungary's economic dependence, or 'exploitation', is decreasing. This indicator shows however that the efficiency of foreign working capital is lower and lower, while an increasing number of Hungarians are working abroad, sending a portion of their income back home.
Both government debt and private debt levels are high in Hungary. In 2012, national debt came frighteningly close to 80 percent of the GDP, while private debt reached 131% of the GDP – and the direction of the trend to come is still unclear for both indicators. The average EU private debt level is slightly higher, the average national debt is slightly lower than Hungarian figures. On the other hand, the average indebtedness of the reference group of the Visegrad countries is significantly lower on both counts.
Hungarian society has become more active, but most of the growth in activity levels can be accounted for by the public works program and people finding jobs abroad. The activity rate of older people is increasing, but not for women.
The Hungarian society is ageing at an alarming rate. Although the fertility rate has risen in recent years, there are increasing numbers of elderly dependents, and this will put an increasing strain on the active generations.
Conserving social spending at the same level relative to the GDP would already be insufficient , but to make things worse, 2015 saw fundamental changes in the social security system, with the state allocating a number of social services within the remit of the local governments. This in turn will have unpredictable consequences.
The level of investments did not year the value lost through depreciation over a period of years. Only state-managed investments, financed from EU funds, rose in 2014. Investments by the private sector have remained at a low level for years.
