This Survey is published on the responsibility of the Economic and Development Review Committee of the OECD, which is charged with the examination of the economic situation of member countries.The economic situation and policies of Hungary were reviewed by the Committee on 30 March 2016. The draft report was then revised in the light of the discussions and given final approval as the agreed report of the whole Committee on 13th April 2016.The Secretariat’s draft report was prepared for the Committee by Jens Høj and Gabriel Machlica from the OECD secretariat, and Edit Huszár, seconded from the Hungarian Ministry of the National Economy, under the supervision of Pierre Beynet. Statistical research was provided by Taejin Park with general administrative support provided by Anthony Bolton. The previous Survey of Hungary was issued in January 2014.

Macroeconomic imbalances are being corrected with the public debt-to-GDP ratio falling and the current account moving to a surplus. Financial vulnerabilities have been reduced, but non-performing loans still hamper bank lending. Growth has been strong since 2012. However, income levels are still well below those in more advanced economies and as economic slack disappears, sustaining growth will require structural reforms to strengthen the business sector and upgrade skills.

Prior to the 2008 global crisis, the Hungarian economy was performing well compared with other countries in the region, partly due to unsustainable external lending, which led to macroeconomic imbalances (Figure 1). Subsequently growth was slower than in most other countries in the region, before accelerating strongly more recently. Moreover, imbalances have been reduced, notably the current account deficit was turned into a surplus and exposure to foreign currency denominated loans was sharply reduced. Nonetheless, the level of real GDP only surpassed its pre-crisis level in 2015. In addition, there has been no significant income convergence vis-a-vis the five richest European countries since the crisis, leaving Hungarian per capita incomes among the lowest in the OECD (Figure 2).

The objective of this Annex is to review action taken since the previous Surveys (January 2014) main recommendations.