This year’s Country Report on Hungary have been discussed at the start of June in Budapest, it provides good first insights into the state of Hungary’s economy.

The report concludes:

Excessive centralization and intense government intervention are both holding businesses back, with the World Bank also seeing a serious deterioration in government indicators. For example, [Hungary has] dropped to 26th place among EU members in terms of anti-corruption controls and to the last, 27th place in terms of the quality of regulation. The structure of public spending has shifted from traditional tasks to economic intervention both compared to 2010 and when compared with the rest of the region, which she believes is not at all beneficial.

[Political economist and lecturer at the University of West Hungary] Zoltán Pogátsa stressed that Balázs Orbán, the Prime Minister’s advisor [not related to PM Viktor Orbán], had identified that we [Hungarians] have fallen into the trap of a middle-income economy. […] Many are stuck in this situation, but [Pogátsa] said that there is a wide range of literature on how to get out of it: those who have managed to escape have done so by strengthening human capital. However, the innovative potential of companies here [in Hungary] is severely limited by the fact that Hungary’s human capital indicators are not on a par with those of other Visegrád countries, from healthcare and language skills to reading comprehension. He expects change to come only when the most important ministers will be those responsible for healthcare or education, but these areas currently do not even have their own ministries.

For a few years, Hungarian productivity did indeed grow, but this is relative. Compared to walking, a horse-drawn carriage is very fast, but not when surrounded by cars – and the Hungarian economy has jumped onto a horse-drawn carriage, while everyone else is driving cars …