Economic analysis in spring 2024
Külgazdaság has been publishing forecasts and analyses by economic researchers, including the outlook of the Magyar Nemzeti Bank, since 2001. Last year, the government’s goal was to avoid recession and bring inflation down to single digits by the end of the year. In this context, our authors were asked to compare these hopes with reality. Their forecasts varied widely. Magyar Nemzeti Bank predicted GDP growth of between 0 and 1.5 percent in 2023, the Makronóm Institute 0.8 percent and the Corvinus University of Budapest 0.2 percent, while GKI Economic research Co. and Kopint-Tárki Ltd. forecast a 0.5 percent decline. Contradicting the most pessimistic forecasts, the Hungarian economy shrank by only 0.9 percent in 2023. The annual inflation rate was anticipated by economic researchers to be fairly accurate, in the range of 17.5-19.5 percent, but they did not expect the average level of consumer prices in December to be only 5.5 percent higher than the previous year. In the current account balance relative to GDP, the researchers projected a deficit of 3.6-4.8 percent, but the actual figure was a slight surplus. The general government deficit, on the other hand, was unsustainable at 6.7 percent of GDP, far exceeding analysts’ expectations. These facts raised key questions for this year: will the fall in inflation be sustained? How fast will the economy grow after a period of very high inflation and corresponding monetary tightening? After last year’s fiscal looseness, how much fiscal tightening is expected this year?
The forecasts were sent to Külgazdaság between 8 April and 27 April 2024.
Upgrading behind the scenes – The role of foreign productions in the Hungarian film industry
TAMÁS VASVÁRI – DÓRA LONGAUER
Over the past decade, the Hungarian film industry has undergone remarkable expansion, primarily propelled by the surge in service productions, where filmmaking is outsourced to Hungary. The substantial growth can be attributed to lower production costs, complemented by state subsidies, and a cadre of well-trained film professionals. Notably, there is not only quantitative but also qualitative progress, evidenced by a milestone achievement in 2022: a Hungarian professional earned an Oscar for outstanding performance in an international production filmed in Hungary. This underscores how collaboration between foreign and domestic crews fosters developmental strides for Hungarian professionals, potentially influencing the overall quality of domestic films. This research delves into the vertical and horizontal impacts of international productions on the film industry, utilizing a pioneering database sourced from IMDb (International Movie Database). Our research unveils a noticeable improvement in the quality of foreign productions. Moreover, these productions are increasingly leveraging the expertise of domestic professionals, while the proportion of Hungarians in key roles has also risen. Despite the inherent duality within the film industry, akin to the manufacturing sector in Hungary, a meaningful interconnection persists between domestic and foreign productions. This interplay results in the transfer of experiential knowledge gained from international productions to Hungarian films. Our findings reiterate the pivotal role of relevant domestic actors, competitors, and skilled labour as conduits for knowledge transfer, affirming that the presence of foreign players can be beneficial to the host economy only when such domestic elements are in place.
Journal of Economic Literature (JEL) codes: L23, L52, L82, Z11.
Populism models in Central and Eastern Europe: a demand-supply approach of contemporary populist economic policies
A review of István Benczes (Ed.): Populism models in Central and Eastern Europe: a demand-supply approach of contemporary populist economic policies
(Routledge, London–New York, 2024, 279 pages)
FERENC KOLLÁRIK
Following the Great Recession of 2008, the proliferation of populism could have been witnessed in several regions of the world. Nevertheless, contemporary populism has become a more complex phenomenon and can be characterized as an adaptive system compatible with almost all kinds of economic and political institutional structures. Whereas political science plays the leading role in researching populism, an economic approach might also contribute to the better understanding of this phenomenon. However, it requires going beyond the framework of classical macroeconomic populism and including broadly understood institutions in the analysis. Moreover, in addition to the factors that determine the demand for populism, greater emphasis should be put on the supply side as well. Central and Eastern Europe, where populism displays a very diverse pattern, offers an excellent field for this type of investigation.
Journal of Economic Literature (JEL) codes: F52, E02, P16, P27.
Keywords: populism, economic populism, economic policy, institutions, Central and Eastern Europe.