What do you think, how has Hungary performed since joining the EU?

Since joining the EU in 2004, Hungary’s convergence has improved by 11.5 percentage points compared to the EU27 average, by which it is ranked only 10th out of 13 Central and Eastern European Member States. Based on this, currently, Hungary is the 8th most developed country in the region. The latest data of Eurostat also revealed which EU members have developed the most in the last 16 years.

Due to the economic decline caused by the coronavirus pandemic last year, a significant drop could be expected in the convergence processes. As we previously reported, the value of the Hungarian forint reached a historic all-time low. Since the global pandemic harmed the economies of all the countries concerned, the weakening of the Hungarian currency did not cause any severe problems.

Based on the freshly published data of Eurostat, Hungary’s convergence has not stopped compared to the EU 27 average, even though it visibly slowed down in the recent period.

Since 2004, Hungary has improved by 11.5 percentage points (from 63% to 74%) compared to the EU27 average, by which it is ranked only 10th on the achieved convergence list out of the 13 Central and Eastern European Member States (EU13).

Accordingly, Hungary was the fifth in 2004 and is currently the 8th most developed member state in the region.

As the Hungarian news portal Portfolio reports, the result is not so encouraging, as only 3 Member States performed worse than Hungary in terms of convergence: Cyprus, Slovenia and Croatia, which only joined the EU in 2013. According to the overall ranking, Lithuania has developed the fastest, the Baltic country has advanced 37 percentage points of GDP per capita in 15 years and is currently the 4th most developed country in the EU13 with 87%. Meanwhile, it was only 50% in 2004.

Besides Lithuania, Hungary has also been overhead by Estonia and Poland, as well as Latvia and Romania have caught up.

The overall ranking that indicates how many percentage points the member states have approached the EU average is the following:

Lithuania (37% ↑)
Romania (37% ↑)
Estonia (30% ↑)
Poland (25% ↑)
Latvia (24% ↑)
Bulgaria (19% ↑)
Malta (12,5% ↑)
Czech Republic (12% ↑)
Slovakia (12% ↑)
Hungary (11,5% ↑)
Croatia (8% ↑)
Slovenia (1% ↑)
Cyprus (-13% ↓)

The convergence index shows a decline in Hungary’s northern neighbour, Slovakia, which, in 2015, was still 78% of the EU27 average, and five years later was only 72% relatively developed. In Slovakia, productivity growth began to stagnate in the recovery period following the 2008 crisis. In addition, Slovakia does not have the necessary quantity and quality of know-how to maintain the high growth rate achieved in the automotive FDI inflow at the time. Although economic growth has not stopped, it has been left behind by neighbouring countries.

The future convergence process is still questionable in Hungary. The Treasury expects growth this year to exceed 5-6%, although this is not yet supported by current industrial and construction processes. Another question is how the skyrocketing increase of prices will affect the economy, through which a significant impairment risk threatens the purchasing power of Hungarian forint.

Source: portfolio.hu