Hungary is facing one of the most severe recessions among OECD countries. High foreign currency indebtedness gave rise to a loss in market confidence, and unsuccessful market financing of the government deficit coupled with limited foreign exchange reserves led the authorities to request financial assistance from international organisations. Amid high exchange rate volatility, macroeconomic policy had to remain tight despite a deep recession. For the central bank, defending the forint had to take precedence over inflation targeting at times. On the fiscal side, discretionary spending was cut significantly. The crisis was also a catalyst to implement decisive structural reforms, such as a far-reaching tax reform, a pension reform and the introduction of a fiscal council and fiscal rules. These ambitious macro and structural policies served to rebuild confidence. Helped by the world recovery, monetary policy has been eased, and the automatic stabilisers have been partly allowed to play. Avoiding major fiscal slippage, especially during the 2010 election year, should help firmly restore confidence and stabilise the economy. Looking ahead, the depth of this recession is bound to leave deep marks in productive capacity. Re-stimulating potential growth and reducing the gaps in efficiency levels (across regions, firms and labour force groups) call for structural reforms, encompassing the labour market, education, entrepreneurship and innovation. The shift in tax burden from labour to consumption in 2009 was a positive step in this respect since it reduces economic distortions. The pension reform and the shortening of maternity leave, which will positively impact labour supply, should be sustained. As for the labour market, active labour market policies could be better-co-ordinated. The product market policies should further support innovation. Finally, a sustained policy of fiscal consolidation should help improve the policy mix while eventually opening the way to tax cuts supportive of growth.