A decade has passed since the recent global financial
crisis. This period saw fast-growing emerging economies become
the engine of global growth. In addition to domestic factors,
both the cyclical recovery in advanced economies and
accommodative global monetary policy conditions contributed to
their dynamic real economic expansion.
Now, it seems that the winds are turning and it may no
longer be possible to sail in calm waters in the years ahead.
As large central banks are gradually changing the course of
their monetary policy stance, investor sentiment and financial
markets are becoming more volatile. Further challenges are also
beginning to emerge as growth in many advanced economies is
reaching its structural limits and geopolitical risks are
Sustainable convergence can only be ensured through the
maintenance of financial stability. That is the basis of
policy. Long-term growth and financial stability absolutely
complement each other. From a macro perspective, resilient and
fundamentally strong economic growth can be only achieved with
a disciplined fiscal policy, strong prudential policy and
innovative monetary policy. In an emerging country, the most
important ingredients of such a forward-looking and
stability-oriented policy should include a stable external
financing position, disciplined fiscal policy, a low share of
foreign currency denomination and a healthy banking system.
These also provide the necessary defensive lines and the
fundamentals of resilient growth, boosted permanently by
competitiveness. The latest trends in technology,
digitalisation and artificial intelligence provide new
opportunities for emerging countries to find their new
Hungarian economic policy has drawn the lessons from the
recent global financial crisis and has focused on building a
more resilient and fundamentally stronger economy since 2010.
Hungary achieved a turnaround in many fields. Using
conventional and unconventional measures, the fiscal deficit
has been reduced in a sustainable way, and the government
debt-to-GDP ratio is declining. With the disappearance of large
deficits, the current account is in a steady surplus and
Hungary's external debt has fallen significantly.
Fiscal and structural policies have been supported by
innovative, targeted monetary policy measures. The Magyar
Nemzeti Bank (MNB) eased monetary conditions in gradual steps
to achieve its inflation target in a sustainable manner. The
conversion of foreign currency-denominated household loans into
Hungarian forints led to a reduction in vulnerability. The
MNB’s self-financing programme mitigated the
exchange rate and rollover risks of government debt.
Comprehensive policy measures contributed to a sustained
reduction in vulnerability, which is quite important,
especially in today’s turbulent times.
It is crucial to strike a fine balance between policies to
foster economic growth and financial stability. For central
banks, promoting price stability with a resilient financial
system and sufficient flexibility is of key importance.
Furthermore, policymakers must place great emphasis on
improving competitiveness using conventional and
non-conventional steps in order to achieve stable and
sustainable economic convergence. It is certain that more
turbulent times lie ahead, and it is worth preparing our
economies well in advance.