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Barnabás Virág

The structural and financing problems of the Hungarian economy became apparent well before the 2008_2009 financial crisis. Low labour market activity slowed down the growth potential of the economy; meanwhile, high foreign and domestic debt increased vulnerability. The global crisis had severe adverse real economic effects, while the deepening political crisis has also hampered effective crisis management. Recognizing the special nature of the crisis, Hungarian economic policy introduced and implemented a new economic strategy, incorporating both conventional and non-conventional elements, based on the coordinated functioning of fiscal and monetary policy. Mutually complementary and sequential steps were able to stabilize the financial situation of the Hungarian economy, and restart growth and the healthy functioning of financial intermediation; meanwhile, the social acceptance of reforms has been preserved. However, to make economic convergence sustainable, turnaround in competitiveness is still needed.