OECD Economic Surveys: Hungary 2021
The COVID-19 pandemic interrupted the strong economic growth performance in 2016-19, which entailed large increases in employment and real incomes, and the lowest unemployment rate in thirty years. The swift vaccination rollout allows a faster recovery from the pandemic from mid-2021 onwards. However, the strength of the recovery is uncertain, reflecting the potential scarring of the economy arising from the prolonged crisis. Looking further ahead, population ageing will lead to a smaller and older workforce, reinforcing the need for improving the productivity performance of the economy to restore the impressive employment and income gains achieved before the pandemic. In the near‑term, underutilised labour resources, such as low‑skilled workers, need to be mobilised through higher labour mobility and skills upgrading. Thereafter, maintaining productivity growth requires improved vocational and tertiary education, more competitive markets, and faster adoption of new technologies, particularly to accelerate the digital transformation of the economy. These policies should be implemented alongside measures to promote green growth and prepare public finances for the long-term fiscal challenges associated with population ageing.
SPECIAL FEATURE: FOSTERING PRODUCTIVITY FOR A STONGER AND SUSTAINED RECOVERY
Also available in: French
Key Policy Insights
In 2016-19, Hungary had strong economic growth with large increases in employment and real incomes, while unemployment fell to its lowest level in the past 30 years. At the same time, public finances improved: public deficits and the public debt-to-GDP ratio shrunk. This strong economic performance came to an abrupt halt in 2020 (). While the first wave of the COVID-19 pandemic was relatively mild from a public health standpoint, containment restrictions and reduced international demand hit economic activity hard. The second wave of the pandemic had more severe health impacts, but milder economic consequences, reflecting more targeted containment measures and robust international demand. The third wave had severe health consequence despite a relatively fast roll out of vaccine programmes. The economic downswing and supportive fiscal policy widened the budget deficit and increased public debt ()
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