Prime Minister Orban expects investment boom in Hungarian economy in 2021

BUDAPEST (Reuters) – Hungary’s economy will benefit from an investment boom in 2021 thanks to government programs to help local businesses, provided the country can prevent a second wave of the COVID-19 pandemic, said on Friday. Prime Minister Viktor Orban.

FILE PHOTO: Hungarian Prime Minister Viktor Orban attends the European Union’s first face-to-face summit since the coronavirus disease (COVID-19) outbreak, in Brussels, Belgium, July 18, 2020. REUTERS / Francois Lenoir / Pool / File Photo

With government support, hundreds of companies have pledged to invest in machines and factories that are due to start production within a year, he said.

“In 2021 we will see an investment boom in the Hungarian economy that has not been seen for a long time,” Orban told state radio.

He warned that a second wave of the new coronavirus would seriously hamper economic recovery.

Orban’s chief of staff said on Thursday that the government would not ease measures to contain COVID-19 after the increase in cases in several neighboring countries.

This month, the National Bank of Hungary (NBH) eased the terms of its 1.5 trillion forint ($ 5.18 billion) cheap loan program designed to help local businesses access good finance market to overcome the coronavirus pandemic.

The new conditions allow companies to use the loans, which bear a maximum interest of 2.5%, to finance foreign investments and pre-finance projects supported by national public funds.

Small businesses can also use the loans to finance current expenses. The first results showed that a small part of the new loans was devoted to investments.

The BNH, led by an ally of Orban, still expects the economy to grow by 0.3% to 2% this year. Hungary’s finance minister said last week that the economy would contract by 5%, lowering an earlier forecast of a recession to 3%.

Last year, the economy, which depends on exports and to a large extent on the auto industry, grew 4.9%.

Hungary reported 4,484 coronavirus cases as of Thursday, with 596 deaths and 3,346 recoveries.

Reporting by Krisztina Than, editing by Timothy Heritage

Laura T. Thrasher