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Hungary’s economy hinges on vaccine discovery

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Hungary’s economy will struggle to grow next year if a coronavirus vaccine is not found, finance minister Mihaly Varga said in an interview published Saturday, as the government prepares to announce more steps to try to revive growth.

Varga told newspaper Magyar Nemzet that if a vaccine is not available by around the middle of next year “then according to our pessimistic calculations it could happen that we will see economic growth hardly exceeding zero.”

Under an optimistic scenario, the economy could grow by 4% to 5% next year if a vaccine is available in the second quarter, he said.

A third scenario is a protracted recovery with 3%-4% growth, but that is also conditional on a vaccine being available, he added.

Hungary’s economy is expected to shrink by 5%-6% this year.

The country’s weakened economic prospects could represent the biggest threat to nationalist Prime Minister Viktor Orban’s decade-long rule as he prepares to face parliamentary elections in the first half of 2022.

Varga said the government was working on new stimulus measures that could include targeted tax cuts for crisis-hit sectors and an extension of a moratorium on loan repayments into next year.

Orban said on Friday a decision on extending the moratorium would be made on Saturday.

The moratorium for all companies and private borrowers, introduced in March, was one of the key government measures to help reduce the economic fallout of the pandemic.

The government has been in talks with local banks on a possible extension of the measure since second-quarter data showed Hungary’s economy contracted by an annual 13.6%, worse than expected and the deepest downturn in central Europe.

After a spike in new cases in recent weeks, Hungary reported 809 new coronavirus infections on Saturday, bringing the total to 16,920, with 675 deaths.

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