Earlier I compared EU/IMF bad boy Hungary’s economic performance since 2010 to EU/IMF good boy Portugal. Now I’m doing the very same comparison between EU/IMF bad boy Hungary and EU/IMF good boy Rumania. Like I tried to point it out then, the previous comparison had its limitations and it wasn’t absolutely conclusive (yet). This one isn’t going to be “perfect” either.
The population of Rumania is about twice that of Hungary’s (20 millions vs. 10 millions) and its present day area is twice as big, too (238,000 square km vs. 93,000 square km). They are neighbouring countries and both are peripheral to the core economies of Europe. Neither country belongs to the Euro zone. Hungary’s currency is called the Hungarian Forint and Rumania’s currency is called the Rumanian Lei. Rumania belongs to Eastern Europe culturally (though Transylvania may be considered Central Europe due to its history), that is Rumania is the cultural realm of Orthodox (Byzantine) Christianity. Hungary belongs to Central Europe culturally, that is Hungary’s culture is based on Western Christianity (both Catholic and Protestant!) Rumania’s GDP per capita was 6200 EUR (8500 USD) in 2012 and Hungary’s was 9800 EUR (13400 USD). Here are a lot more data to compare.
Both countries had Communist dictatorships until 1990. Though Hungary’s was a lot more lax one than the totalitarian dictatorship Rumania had. Hungary’s transition to democracy was a negotiated, peaceful one, while Rumania’s dictatorship ended with bloodshed, a revolution which was sparked by the courage of an ethnic Transylvanian Hungarian Protestant priest, László Tőkés. So there are a lot of similarities and differences between the two countries.
Another difference is that Rumania, just like Portugal did, as I wrote in the first part, chose to follow the EU/IMF economic recipes in 2010 and Hungary chose to rebel against them.
So let’s see the same data again, let’s see how those economic figures, and with special regard to the ones important for people’s everyday life, have changed in good boy Rumania and in bad boy Hungary since 2010. 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:
Kudos to Rumania, their GDP growth is more robust than Hungary’s
What about the public debt to GDP ratio?
Hungary’s public debt seems to have become stagnant, Rumania’s seem to be on the rise. However Rumania’s debt is way much lower than Hungary’s!
A positive trade balance means you sell more than you buy. A negative one, like the US has with China, means you get indebted.
Unlike Hungary which has been having record high trade balance surpluses, Rumania runs a big trade balance deficit.
Now let’s see those figure again which directly affect people’s lives. As far the the inflation rate figures go, I think it’s all right to call it a draw.
Unemployment rate is something which really affects people. Unemployment at a young age and long term unemployment are especially devastating. The situation in both countries seems to be similar to me. Well, it’s not particularly good.
Long term unemployment seems to get somewhat worse in Rumania and it seems to have improved somewhat in Hungary.
The overall unemployment rate seems to be comparable, and stagnant, in both countries.
And what about the wages and the income tax which also directly affect people? The wages are rising in both countries.
The dynamics of the wage change looks pretty much the same to me.
Rumania introduced a flat rate 16% personal income tax much earlier than Hungary. So now this is the same in both countries.
Let’s see the construction output as in the previous post:
This looks to be the same, too.
Unfortunately tradingeconomics.com doesn’t have data on the foreign direct investments in Rumania.
The corporate tax rates are identical in both countries:
The comparison with Rumania seems to produce a lot less clear picture than the comparison with Portugal. Rumania is doing better in some respect and Hungary does in some other. I think it’ll be well worth doing some more comparison, probably also along some other lines, in a year or so.
- Orthodox vs. unorthodox, Part One(politicsinhungary.wordpress.com)
- Hungary and the Euro (politicsinhungary.wordpress.com)
- Uncreditable credit rating agencies (politicsinhungary.wordpress.com)
- Evangelii Gaudum on free market idolatry (politicsinhungary.wordpress.com)