OECD Economic Surveys_ Hungary - OECD

Table of contents
Basic statistics of Hungary, 2010
Executive summary
Assessment and recommendations
	Hungary’s economy is facing renewed market stress
		Figure 1. Key indicators
		Table 1. Short-term outlook
		Stabilising the economy and boosting potential growth
	Short-term policies to restore confidence and head off the risk of a prolonged downturn
		Resuming fiscal consolidation
			Figure 2. Net lending and fiscal consolidation
			Figure 3. Average tax wedge for different income percentiles
			Figure 4. General government deficit and elections
		Facilitating household deleveraging without hurting banks is the key to putting growth on a sound footing
			Figure 5. Corporate and household lending
		Appropriate measures to support the labour market and prevent an increase in structural joblessness
			Figure 6. Beveridge curve, long-term unemployment and NAIRU
			Box 1. Core recommendations on short-term policy priorities
	Medium-term structural policies to foster potential output growth
		Making debt sustainability less sensitive to macroeconomic shocks
		Ensuring stable and affordable financing of the economy while minimising financial risks
		Living standards can be boosted by lifting one of the lowest participation rates in the OECD
			Figure 7. Labour force participation rates in OECD countries
			Figure 8. Employment rates of women and total fertility rates
		Improving health outcomes and the system
			Figure 9. Life expectancy at birth relative to national income and health expenditure
			Box 2. Core recommendations on medium-term policy priorities
	Bibliography
	Annex A1. Progress in main structural reforms
Chapter 1. Ensuring debt sustainability amid strong economic uncertainty
	A relatively favourable fiscal position despite the economic crisis
		The cyclically-adjusted deficit improved markedly since the onset of the crisis…
			Figure 1.1. General government financial balances
			Box 1.1. A DSGE simulation of the macroeconomic impact of fiscal consolidation in Hungary
		… although the underlying fiscal position has significantly deteriorated recently
			Figure 1.2. Cyclically adjusted and underlying fiscal balance
			Box 1.2. Dissolution of the second pillar of the pension system
			Figure 1.3. Composition of fiscal consolidation
		The Széll Kálmán plan: a positive step towards a more sustainable fiscal consolidation
			Table 1.1. The Széll Kálmán plan
	Long-term fiscal sustainability remains highly sensitive to economic shocks
		The downward debt trajectory is highly sensitive to economic shocks
			Figure 1.4. Characteristics of government debt
			Figure 1.5. Stochastic general government debt simulations
		Long-term fiscal sustainability gaps may have worsened recently
			Table 1.2. Sustainability indicators
			Table 1.3. Projected change in gross age-related expenditure/GDP ratio and contributing factors
	Achieving more progress towards fiscal sustainability
		Reducing the impact of economic shocks on public debt
			Table 1.4. Hungary: debt management responses to the crisis
			Figure 1.6. Evolution of debt risk indicators
		Improving the future consolidation mix
			Figure 1.7. Government employment
		Tackling long-term pressures on public spending of population ageing
		Adequate fiscal rules could help maintain the fiscal adjustment effort
			Box 1.3. Recommendations on ensuring debt sustainability amid strong economic uncertainty
	Bibliography
	Annex 1.A1. A stochastic approach to Hungarian debt sustainability
		Table 1.A1.1. Standard deviation of shocks
		Table 1.A1.2. Correlation of shocks
Chapter 2. Ensuring financial stability and efficiency
	The banking sector remains fragile with a risk of credit rationing
		The banking sector remains vulnerable…
			Figure 2.1. Capital adequacy ratio
			Figure 2.2. Leverage ratio
			Figure 2.3. Loan-to-deposit ratio
			Figure 2.4. The structure of banks’ liabilities
			Figure 2.5. Overdue and renegotiated loans
			Table 2.1. Claims in arrears
		… which could lead to credit rationing
			Figure 2.6. Credit conditions and credit standards remain tight
			Figure 2.7. Corporate and household lending
	Restoring financial intermediation requires a careful mix of measures
		Tighter regulation should take into account risks of procyclicality
			Box 2.1. Major measures taken to reduce household indebtedness and to clean-up banks’ portfolios in 2011
		Debt restructuring programmes should not impose an excessive burden on banks and be well-targeted
		The design of a financial levy should not hurt bank solvency
			Figure 2.8. The average ratio of taxes to total bank assets
			Table 2.2. Comparison between bank levies
			Figure 2.9. Profitability of Hungarian banks in comparison to profitability of other banks in the region and parent banks in home countries
	Sustainable financing of the economy requires lowering intermediation costs
		High intermediation costs point to a lack of competition
			Figure 2.10. Net interest margins in Hungary in comparison to its peers and decomposition for Hungarian banks
			Box 2.2. Measuring market competition
			Figure 2.11. Competition measures
		Competition could be enhanced by encouraging consumer mobility
		Efficient regulation of pension funds should spur long-term savings
			Table 2.3. Relative performance of pension funds
			Figure 2.12. Portfolio composition of pension funds
			Box 2.3. Charge ratio
			Table 2.4. Charge ratios and equivalent asset-based fees
			Figure 2.13. Charge ratios of Hungarian pension funds
	Financial regulation and supervision has to take into account systemic risks
		Macro-prudential regulation should be adapted to local credit cycles
		Asymmetry between host and home regulation should be addressed
			Box 2.4. Policy recommendations to ensure financial stability and efficiency
	Bibliography
	Annex 2.A1. Determinants of net interest margins in Hungary and its OECD peer group in Central and Eastern Europe
Chapter 3. Towards a more inclusive labour market
	The crisis and its aftermath have taken a heavy toll on the labour market
		A limited impact of growth on job creation so far
			Figure 3.1. Unemployment rates have increased since the crisis
			Figure 3.2. The effects of the recession across groups of workers
			Figure 3.3. Change in labour force participation rates
		Ensuring labour market recovery
			Figure 3.4. Regional migration and unemployment
			Figure 3.5. Employment protection legislation
	Raising participation rates
		Various groups of workers are poorly attached to the labour market
			Figure 3.6. The source of differences in labour utilisation in selected OECD countries
			Figure 3.7. Labour force participation rates by age group and gender
			Figure 3.8. Labour force participation rates by age group and level of education
	Improving the integration of under-represented groups in the labour market
		Fostering the development of part-time employment
			Figure 3.9. Part-time employment
		Reforming family policies to enhance women’s labour market participation
			Figure 3.10. Maternal employment rates relative to social expenditure, parental leave and childcare
		Improving labour market integration of disabled working-age population
			Figure 3.11. Disability benefit recipients and employment rates of disabled workers
		Remedying youth non-employment by reforming the education system
			Figure 3.12. Combining study and work is an effective pathway to enter the labour market
		Promoting the participation of the elderly
			Figure 3.13. Employment rates of older workers and retirement age
			Figure 3.14. Lifelong learning and employment rates
		Tackling the problem of labour market exclusion of the Roma
			Box 3.1. Recommendations to foster labour market inclusiveness
	Notes
	Bibliography
Chapter 4. Improving health outcomes and system
	Health outcomes are generally poor
		The overall health status of the Hungarian population is weak
			Figure 4.1. Life expectancy indicators
			Table 4.1. Mortality rates for infants and by leading causes
		Inequality in health outcomes is high
		Poor health outcomes are driven by factors beyond the health care provided
			Figure 4.2. Health risks
	The health system has been ineffective at improving the health status
		Figure 4.3. Mortality amenable to health care and health expenditure
		A high utilisation of health care services with limited resources
			Figure 4.4. Health care consultations and hospital resource use
			Figure 4.5. Health care resources
			Table 4.2. Health care expenditure for selected types of care
			Figure 4.6. Pharmaceutical expenditure
		The delivery of health care services faces funding and staffing constraints
	Reforms of the health care system
		Enhancing spending efficiency, keeping output inflation and costs under control
		Improving health outcomes and macroeconomic performance
			Figure 4.7. Relative survival rates for cancer
			Table 4.3. Average monthly earnings of employees by sector of activity
			Figure 4.8. Age distribution of physicians
			Box 4.1. Policy recommendations to improve health outcomes and system
	Notes
	Bibliography
	Annex 4.A1. Health care system organisation
		Figure 4.A1.1. Flow of funds in the health care system
Glossary