Overview: Reforms for Stability and Sustainable Growth

Looking at the current economic performance and the actual reform issues, there is no doubt that Hungary needs to forge ahead with both fiscal consolidation and structural reform. Doing so will bring considerable dividends to the economy. The immediate gains will come through increased confidence and lower interest rates. They will be reinforced over the medium term by the growing prospects for reducing taxes and social security wedges as public spending reforms get entrenched. If these issues are tackled with speed and determination, the Hungarian convergence process should pick up once again, underpinned by a more balanced economic development. While the ongoing Hungarian reform efforts impress by their scope and thoroughness, the purpose of this report is to help Hungary benefit from the experience of other OECD countries, which are also in the process of enhancing their growth potential by implementing pertinent structural reforms. The main aim of the report is to provide a forward-looking perspective, pointing out potential areas for further improvement, indicating risks, and highlighting interactions and complementarities between reforms.