After a strong demand-based recovery following the COVID-19 pandemic, economic activity declined amid high inflation. Growth has restarted in mid-2023 and inflation is receding, but fiscal and monetary policies need to work hand-in-hand to fight remaining inflationary pressures and recreate fiscal space to finance future spending needs. Productivity growth has slowed since the mid-2000s and structural reforms that facilitate new firm entry and exit and a wider take-up of digital tools are needed.
Hungary Economic Snapshot
The snapshot offers a concise summary of Hungary's economic trends and prospects, drawing from the OECD Economic Survey, Economic Outlook, and Economic Policy Reform: Going for Growth reports, delivering in-depth analyses of economic trends, suggested policy recommendations, alongside an overview of structural policy developments.
Key links
Latest Economic Survey of Hungary (March 2024)
Strengthening the Hungarian Pension System (July 2024)
The Hungarian pay-as-you-go public pension system performs well in maintaining the standard of living after retirement. However, like in other EU countries, population ageing challenges the pension system as fewer working-age individuals must finance higher pension-related spending. Past modifications increased the effective retirement age and prolonged careers, partially offsetting some of the adverse fiscal effects of population ageing. Nevertheless, spending on public pensions is expected to rise by about 4.3% of GDP by 2070. This OECD report presents a diagnostic of the challenges faced by the current system and describes a set of policy options for adjusting selected pension parameters, including eligibility conditions, benefit levels and contribution rates that allow for improving fiscal sustainability while preserving the adequacy of the pension system. It shows the impact of each policy option on future pension expenditures, pension levels, the tax wedge, and expected years in retirement. Relying on the impact analysis, the report identifies measures to accompany the different policy options such as simplifying the pension benefit calculation, raising the effective retirement age, reinforcing the role of voluntary pension instruments, and increasing fertility rates.
The report was jointly prepared by the Economics Department (ECO) and the Directorate for Employment, Labour and Social Affairs (ELS), with the support of the Ministry of Finance of Hungary.
