Portugal is comparable to Hungary both in population (10 million people) and in territory (92,000 and 93000 square km respectively). Both countries are peripheral to the core economies of Europe. The differences are significant though. Portugal is a member of the Euro zone and Hungary has its own currency (Hungarian Forints). Portugal is a Mediterranean country with an Atlantic Ocean shore, Hungary is a land-locked country in Central Europe. So the culture and the history are very different, too. Portugal’s GDP per capita was 20,180 USD in 2012 and Hungary’s was only 12,620 USD. Another difference is that Portugal chose to follow the EU/IMF economic recipes in 2010 but Hungary chose to rebel against them.
Still, let’s see some quick comparisons how some economic figures, and especially the ones important for people’s everyday life, have changed in good boy Portugal and in bad boy Hungary since then. First let’s review some basic, major figures which are somewhat indicative of how these economies were doing in 2010 and how they are doing now:
A positive trade balance means you sell more than you buy. Hungary’s trade balance was always negative prior to 2009 but Hungary has been producing big pluses since then.
Now let’s see those figure which directly affect people’s lives. While Hungary still had a relatively high inflation in 2010, Portugal had a very low inflation in 2010. Portugal experienced a peak in the meantime but their inflation rate is back to nearly zero again. Inflation has decreased to nearly zero in Hungary only recently.
Unemployment rate is something which really affects people. Unemployment at a young age and long term unemployment are especially devastating.
And what about the wages and the income tax which also directly affect people?
Maybe the progress happened at the expense of the business sector in general? Let’s see the construction output
or foreign direct investments:
or the corporate tax rate:
Well, let me not draw the final conclusion yet that the EU/IMF orthodoxy is a complete failure and the Hungarian “unorthodoxy” is a complete success because the jury is still out on this. Let’s regard these charts instead as a report after three years on the progress of a 10-20 year race. To filter out the effect of Portugal’s having the Euro, which I think is largely responsible for the troubles in Portugal, and Hungary’s having its own currency, I’ll have to do a similar comparison with ‘good boy’ Romania… and caution will be required there, too.
- Hungary and the Euro (politicsinhungary.wordpress.com)
- Uncreditable credit rating agencies (politicsinhungary.wordpress.com)
- Evangelii Gaudum on free market idolatry (politicsinhungary.wordpress.com)
- Unorthodox (sounorthodox.wordpress.com)