The deteriorating growth prospects of the Hungarian economy are in part a consequence of the worsening global economic environment and the uncertainties concerning the solvency of some countries. However, domestic economic policy played a decisive role.
The deteriorating growth prospects of the Hungarian economy are in part a consequence of the worsening global economic environment, the lower than expected level of indicators in the second quarter and, especially, in the summer, and the uncertainties concerning the solvency of some countries. However, domestic economic policy played a decisive role. According to data of the second quarter in 2011, it prevented an increase in domestic demand more than previously envisaged and lifted risk premiums. The increase in real wages experienced only by high-income people has not raised consumption, whereas the crisis taxes have curbed the current and investment demand of companies as well as their borrowing options. Deluding those with mortgage loans and putting the problems off until later seemed only to preserve them. Later, the idea of paying back FX-loans at below market exchange rates caused a crisis of confidence concerning the Hungarian economy, similarly to the crisis in summer 2010. The legal uncertainty and the lack of predictability also played a part in the fact that in the first quarter of the year the outflow of foreign direct investments surpassed the inflow. The investment activity of the business sector is modest and declining, except a few projects, typically launched several years ago, of some large automotive companies.
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