Hungarian Economy Expanded in Fourth Quarter

According to government data, the Hungarian industrial sector propelled the economy forward in the later part of 2015, compensating for lacking output in agriculture and construction, according to Bloomberg Business. The economy also expanded 3.0% annually, with GDP growing 3.2%. The latest data marks Hungary’s eleventh consecutive quarterly growth rate.

According to government data, the Hungarian industrial sector propelled the economy forward in the later part of 2015, compensating for lacking output in agriculture and construction, according to Bloomberg Business. The economy also expanded 3.0% annually, with GDP growing 3.2%. The latest data marks Hungary’s eleventh consecutive quarterly growth rate.

Hungary may have weathered the turbulence of the world economy, but the Central European country is not out of the danger zone yet. Authorities aim to cut taxes for certain industries to fend off a Eurozone slowdown, including banking sector assistance to jump-start lending. Hungary is part of the EU and needs Brussels for infrastructure projects and trade.

The nation is caught between the need for national independence and further integration into the world economy, but the central bank is the primary entity that could foster greater growth with the right policies. With that, the banking authority has some issues to overcome.

Central Bank Power

President János Áder blocked a bill that would have given Hungarian National Bank Governor Gyorgy Matolcsy the power to conceal business transactions within various departments, notes Reuters. Ader rejected the amendment on constitutional grounds, but the decision was a slight against Prime Minister Viktor Orbán, an ally of Matolcsy and someone who supports cheaper loans and interest rate reductions to fix the economy.

While the bill will have no major effect on the economy’s future, the dispute highlights Hungary’s direction in terms of transparency and image to the rest of the world. The incident with the central bank is the latest in a string of controversies. Critics charge that the bank made questionable investments in art and real estate while amassing an arsenal of ammunition and weapons to prepare against alleged threats against terrorism and migration. Though the bank will play a vital role, most of Hungary’s fate could lie with the EU.

Joining the Eurozone?

Leaders face the tough decision of adopting the euro in the next few years. This could be a problem, however, as Orban is a staunch nationalist and opposes foreign interference, especially from the EU, but Hungary may have no choice because of its reliance on Brussels and the obligation of all EU states to join the euro eventually, with the exception of Denmark and the United Kingdom. Hungary has clashed with its Western neighbors on numerous occasions, most notably the growing number of migrants entering Western Europe through places like Hungary, causing the government to tighten its borders.

A closer alliance with the EU could also mean adopting a policy of welcoming more migrants and refugees. Hungary has a right-wing government that has helped a limited number of migrants and lacks the political will to help more people. The idea of Hungary joining the Eurozone is a possibility, but doing so requires amending the constitution, which stipulates that the forint is the sole currency in Hungary. Parliament needs a two-thirds majority, but the administration currently does not have enough votes in parliament.