It took 10 months for the Hungarian economic policy to formulate those questions for which the answers should have been given in summer of 2010.
The history of the new government’s first year is mainly that of fighting for a larger room of manoeuvring for economic policy, mostly in vain, rather than initiating real changes. The confidence of international and domestic investors has been eroded by the government’s attempts to eliminate the separation of powers of the constitutional state, the attacks on independent institutions, and the confrontation with international organizations in general, and with the EU in particular, as well as with foreign companies investing in Hungary. The economic policy decisions of the new government affected financial conditions more than real economic trends in 2010. Typically, last year the forint weakened, the risk premium and the interest rate increased, and credit rating agencies downgraded Hungary’s government debt to the bottom of the investment grade. Therefore, the country's ability to attract capital and to generate economic growth weakened. Those fields were hit (SMEs, employment, protection of debtors in foreign exchange) that had been considered very important by the government. The government was finally forced to do what it wanted to avoid, and in early March it presented Szell Kalman Plan, a promising program envisaging some structural changes as well. It took 10 months for the Hungarian economic policy to formulate those questions for which the answers should have been given in summer of 2010.
You can download the forecast from here.
