The Hungarian economy is currently under heavy pressure and there is a fear of its collapse. For a country to go bankrupt, a lot needs to be done. Still, the country’s economy is not doing well. Many hope that a new currency might bring the long-awaited salvation. However, this might not be the case, according to analysts. Amid a crisis, introducing the euro is certainly not a good idea. However, the crisis is not the only problem.
In the current situation of Hungary, the euro’s introduction is still far away. According to the agreement with which Hungary joined the European Union, it must eventually introduce the euro. But even after eighteen years of being a member, this still seems unrealistic. The Hungarian economy is not in a position where such a move would be a good idea. In times like these, even the criteria for introducing the euro are volatile because the markets are so uncertain. This would make it very hard to even think about how to introduce the currency and most likely compromises would be needed.
The near future will not be better The war will not end according to forecasts even by the same time next year. At least 2-3 years will be needed for a clearer picture, said Péter Virovácz, the lead analyst of the ING Bank, to Index.hu. As long as the economies do not stabilise, we will not be able to see the true state of economies. The analyst also says, that changing the criteria would be a logical move to ensure the fiscal stability of the Union.
During the Covid pandemic, the Hungarian economy saw one of the lowest recessions mostly because of independent monetary politics. Hungary was able to deal with the pandemic on its own, but the energy crisis is too overwhelming. In the first case, independence was a blessing, but now it is a curse. In the past few months, the euro also weakened, so even with it, inflation would be present. But this inflation would be less as it would mostly affect non-euro-based transactions.
Dávid Németh, the lead analyst of the K&H Bank said that Hungary could be worse off with the Euro in the next 20 years. After joining the Eurozone, Hungary would lose its competitiveness for at least 1-2 years. Without widespread discussion, the question of the Euro introduction still remains a mystery. The government must include the largest employers in the discussion to know whether employees would be better or worse off with the euro. If the companies themselves are not able to benefit from the currency change, then no one really will.
Without budgetary discipline, Hungary will not be able to join the Eurozone any time soon. The current situation might put enough pressure on the government to change its spending practices. The euro is not a guarantee for a better economy. For a better answer, we will have to wait for calmer times.