Economic Analyses in Spring
2025 Since 2001, Külgazdaság has been publishing the forecasts and analyses of economic researchers, including the outlook of the National Bank of Hungary. For last year, the government’s goals included dynamic economic growth, mitigating inflation and a budget deficit of less than 3 per cent of GDP. By contrast, in 2024, the gross domestic product grew by a mere 0.5 per cent, inflation was suppressed only temporarily, and the general government’s EU deficit indicator (ESA 2010) was 4.9 per cent of GDP. The fourth quarter did not prove to be a success either. The government planned a dynamic start for 2025, but the statistical data for the first quarter of this year paint a picture of a stumbling economy. The government elaborated the budget law for this year on the assumption of 3.4 per cent GDP growth, a 3.2 per cent inflation rate and a 3.7 per cent budget deficit relative to GDP, but these hopes were dashed by March. And on 2 April, US President Donald Trump’s tariff hike plans devastated the global environment of the Hungarian economy, further worsening the outlook. This year, we asked prestigious economic researchers and analysts to publish their forecasts in Külgazdaság. As usual, the National Bank of Hungary presented a summary of its prognosis in this issue based on its 2025 Inflation Report. The manuscripts reached our editorial office between 7 and 15 April 2025.
Returnees in the domestic labour market
ÁGNES HÁRS – DÁVID SIMON
Labour emigration has become a significant labour market issue in the last decade(s). The extent of emigration, the composition of emigrants, their shortage and their possible replacement in the domestic labour market are closely related policy issues to which various responses have been formulated. Attracting the scarce reserves of the domestic labour market, which requires well-targeted and well-designed labour market training or encouraging returns with expensive and uncertain success, can expand supply. Above all, however, the little-studied natural return process needs to be understood. While some returnees stay at home, others repeatedly leave, commute or live and work abroad. In this process, neither emigration nor return selection is random, and migration thus involves a double selection, either positive or negative, which may determine the composition of returnees. This article examines the measurable impact of emigration on returnees, taking into account double selection: who are the returnees, do they work, and if so, in what form, and what premium, usually measured in terms of income, does their migration history place on returnees? The article seeks to answer these questions through a new data set created by the authors, allowing for a deeper and more factual analysis than before (with limitations regarding the current data). This article presents the first results of a longer study. The impact of returnees on the labour market at home can, of course, be raised, but the answer is beyond the scope of this article and will be answered later in the study.
Financing the real economy in the Central and Eastern European countries in the Covid and post-Covid period
ANDRÁS BETHLENDI
In the Covid and post-Covid period, the study examined eleven CEE countries to see whether the financing of the real economy was damaged, and to what extent did domestic lending processes support the economy’s recovery from the shock. Narrowing the analysis to the dominant banking sector in the CEE region, the relative financing of the real economy in six CEE countries has significantly decreased by 2023, and a creditless recovery has occurred. In the absence of structural changes, this phenomenon may re-emerge in the event of another future negative shock. The results show that in a significant part of the CEE countries, the resilience of the banking sector is weaker than in developed countries. Fiscal and monetary policy in the majority of countries have been basically moving in the same direction. The three macroprudential indicators examined (capital, profitability, and portfolio quality) already show higher cross-sectional variability. It is demonstrated that the development of bank loan portfolio quality and lending are mutually reinforcing factors. The relief of prudential and supervisory requirements showed no clear connection with lending. However, in the case of the payment moratorium, we got the expected relationship. The moratorium is a suitable tool for short-term shocks, but its longer-term application can weaken lending processes.
Review
Komlos J. Foundations of real-world economics. What every economics student needs to know (3rd ed.). New York, USA: Routledge
TIBOR BARDÓCZY
This review presents the third English edition of John Komlos’ book. The author offers a clear and frank critique of many components of mainstream economics. His basic thesis is that the capitalism we live under does not serve the interests of citizens but instead favours the enrichment of the elite. His argument is supported by examples and case studies drawn from recent decades of economic and social crises. The third edition of the book, which includes events such as the COVID-19 pandemic, highlights the mistakes of recent political and economic leaders and shows what an ideal – but market-based – approach to economics would look like. The review seeks to convey Komlos’ critical perspective, using practical examples from his book.