July 31, 2020 / 8:28 AM / 13 days ago

PM Orban expects investment boom in Hungarian economy in 2021

BUDAPEST (Reuters) - Hungary’s economy will benefit from an investment boom in 2021 as a result of government programmes to help local companies, provided the country can prevent a second wave of the COVID-19 pandemic, Prime Minister Viktor Orban said on Friday.

FILE PHOTO: Hungarian Prime Minister Viktor Orban arrives for the fourth day of the European Council meeting in Brussels, Belgium, July 20, 2020. Stephanie Lecocq/Pool via REUTERS/File Photo

Using government support, hundreds of businesses have undertaken to invest in machinery and factories that must start production within a year, he said.

“In 2021 we will see an investment boom in the Hungarian economy not seen for a long time,” Orban told state radio.

He cautioned that a second wave of the new coronavirus would seriously hinder economic recovery.

Orban’s chief of staff said on Thursday the government would not relax measures to contain COVID-19 after cases increased in several neighbouring countries.

This month, the National Bank of Hungary (NBH) eased the terms of its 1.5 trillion forint (3.94 billion pounds) cheap loans scheme designed to help local businesses gain access to cheap funding to overcome the coronavirus pandemic.

The new terms allow companies to use the loans, which carry a maximum interest of 2.5%, to finance foreign investments and pre-finance projects backed by domestic government funds.

Small businesses can also use the loans to finance current expenditures. Initial results showed just a small portion of the new loans went into investments.

The NBH, headed by an Orban ally, still expects the economy to grow by 0.3% to 2% this year. Hungary’s finance Minister said last week said the economy would contract by 5%, downgrading an earlier forecast for 3% recession.

Last year the economy, which is dependent on exports and to a large extent on the auto industry, grew by 4.9%.

As of Thursday, Hungary had reported 4,484 coronavirus cases, with 596 deaths and 3,346 recoveries.

Reporting by Krisztina Than, Editing by Timothy Heritage

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