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.

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 ($5.18 billion) 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)