Judit Neményi

Balance of Payments, Exchange Rates, and Competitiveness in Hungary

The assessment of Hungary’s economic performance has been based on macro dominantly, the major criteria being the rate of growth and inflation. In this respect Hungary was lagging behind not only the fast-reformer transition countries, but behind some slow reformers, as well. The macroeconomic mismanagement in certain periods has been analyzed hundreds of times; the problems related to large-scale corporate restructuring, however, have not been much emphasized. The excessively strict bankruptcy regulations at the outset, the bank and credit consolidation programs, combined with the relatively high inflow of capital ensured the necessary conditions for corporate restructuring, while the weak domestic demand stimulated exports to cover costs in the early phase of transition. Industry-level growth figures reflect great deal of variation; certain manufacturing industries produced a two-digit increase in output and exports in 1995 to 1996, and there are still sectors that have to scale down the activity level.