Hungary is facing one of the most severe recessions among OECD countries. Despite financial assistance from international organisations, macro policies had to remain tight. Stabilisation is underway, but the depth of the recession will leave deep marks. Looking forward, restoring sustainable growth requires decisive structural reforms. The shift in the tax burden from labour to consumption in 2009 was a positive step toward reducing economic distortions. The pension reform, which will increase labour supply, should be sustained. To increase productivity, innovation policies should be promoted. A well-balanced policy mix is also critical to restoring growth. Fiscal consolidation should continue, while avoiding excessive pro-cyclicality, if the economy deteriorates beyond anticipation. As the economy recovers, the central bank should continue to carefully communicate to financial markets so as to avoid financial stability concerns in case of sudden changes in market sentiment.