Shocking: Hungary has almost no chance of reaching the economic development level of Romania

Before, the Hungarian administrations regularly said their aim was to reach the economic development level of Austria. Hungarians supported that enthusiastically. In 2004, when Hungary joined the European Union, one of the main campaign slogans was that all Hungarians would be able to open a confectionery in Vienna. Instead, in the last 20 years, even Romania preceded Hungary.

Hungarians behind Romania, Croatia, Slovakia

Ákos Péter Bod, the former governor of the Hungarian National Bank between 1991 and 1994 and a chief economic advisor of PM Viktor Orbán in the 2000s, wrote an article to portfolio.hu with some serious claims about the problems of the Hungarian economy.

In his article, Mr Bod argued that Hungarian society thought about Hungary as a country more developed than Romania. The Hungarians accepted that the “capitalist” European countries like Austria are more developed than their country. The society even accepted that former Socialist countries like the Czech Republic or Slovenia are also on the brighter side of the European economy. However, they believed Hungary was more developed than Romania.

And that is when the 2023 GDP per capita was released and erased that reference point. The new data showed that Romania preceded Hungary according to the Eurostat. Croatia, Slovakia, Latvia, Greece, and Bulgaria remained behind Hungary.

Actual individual consumption per capita in Hungary is even worse

Mr Bod said it was hard to compare the two countries’ economies. The economy professor cites the so-called actual individual consumption per capita, a factor regularly used in international comparison. It shows the consumption level a country provides for its citizens. And Hungary was in very bad shape in that regard, even in 2022, the year when the Orbán government transferred lots of money to the people to win the elections. For example, they gave back the whole amount of the personal income tax to the families raising children. That meant thousands of euros extra for families where both parents work.

According to the data of the Eurostat, Hungary is among the Balkans countries in that regard. It precedes only Bulgaria in the European Union.

Romania’s advance is considerable: 86% of the EU average, while Hungary is at 71%. And Bulgaria is almost there, as well, with 69%. Croatia stands at 76%, with Slovakia at 77%.

Hungary can reach only Romania’s level, but only in the 2030s

Among the reasons for Hungary’s lag, Bod mentions the large state. The Hungarian state centralizes 43% of the GDP, while that rate is only 33% in Romania. The Hungarian state’s intervention in the economy has expanded a lot lately. And the Ministry of National Economy does not want to change that. What’s more, the Hungarian government would like to increase state intervention concerning investments in the future.

The large state is a Hungarian speciality and not typical in our development category, Mr Bod concludes.

He also says that Hungarians should forget about reaching the Austrian development level. Instead, we should focus on reaching Romania. But we only have an opportunity to do so by 2030 at the earliest.

Read also:

• Surprising: Romania more developed than Hungary, and people may live better – read more HERE
• Cheap real estate: Romanians move to Hungary, own half the houses in this town

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