Hungary’s economy to get boost from housing next year, PM Orban says

3:08 am Friday, October 11th, 2024

By Gergely Szakacs and Anita Komuves

BUDAPEST (Reuters) -Hungary’s economic growth will accelerate substantially in the first half of next year due to an expected housing boom backed by government measures, Prime Minister Viktor Orban told public radio on Friday.

In power since 2010, the veteran nationalist has struggled to revive Hungary’s economy after last year’s downturn following a surge in inflation to more than 25% in the first quarter of 2023, the highest level in the European Union.

Orban said the planned measures, which his government will unveil within the next few weeks, would include the release of long-term savings to the housing market with the help of changes in regulations.

Previously government officials have signalled that the planned moves could channel 300 billion forints ($817.53 million) to the housing market as a one-off measure next year by releasing some of the savings held in private pension funds.

“We already have the framework of the specific measures emerging. We will give a massive boost to the Hungarian economy,” Orban said, adding that the pace of growth in the first half of next year would be “very spectacular.”

Facing a parliamentary election in the first half of 2026, Orban has already pledged to double tax benefits for families and a substantial capital injection programme for small businesses in 2025, while also targeting large-scale wage hikes.

Hungary’s budget deficit has averaged nearly 7% of gross domestic product since the COVID-19 pandemic, and ratings agency Moody’s projects the shortfall at 5.5% of GDP this year even after recent attempts to curb the gap.

The government targets a 4.5% shortfall this year and on Friday Orban reiterated that the deficit would be lowered next year regardless of the planned stimulus measures.

“We will have to secure the funding for the programmes I have mentioned from the internal resources of the Hungarian economy in a way that we continue reducing the debt and the budget deficit,” Orban said. “This is possible.”

($1 = 366.96 forints)

(Reporting by Gergely Szakacs; Editing by Sharon Singleton)