Leading European Agency Recommends Hungary for Investment

Hungary Today 2024.01.29.

The Mercedes plant in Kecskemét (central Hungary), one of the many important investments in the automotive sector

Scope Ratings recommends Hungary for investment, announced Finance Minister Varga Mihály on his social media page. The company praised the country for the inflow of foreign direct investment, which helps sustain growth.

After the three major credit rating agencies, Scope Ratings of Berlin has confirmed its ‘BBB’ rating for Hungary with a stable outlook, reports Magyar Nemzet.

The rating agency gave a positive assessment of Hungary’s competitiveness-enhancing investments and its resilience to negative external shocks.

Scope Ratings expects economic growth of around two to three percent, a declining budget deficit, and declining public debt in Hungary in the coming years, Finance Minister Varga Mihály wrote in a Facebook post.

Scope Ratings wrote on their website: “Hungary’s ratings are underpinned by a strong track record of high economic growth, primarily driven by foreign investment and EU funding. Pre-pandemic, the nation sustained an average annual output growth of 4.1% from 2015 to 2019, attributed to heightened investment and structural enhancements. Despite Hungary’s vulnerability due to its reliance on energy-intensive businesses with complex value chains and Scope’s expectations of subdued economic activity among Hungary’s main trading partners, the offsetting impact of major capacity-expanding foreign direct investment (FDI) is projected to sustain growth.”

Scope Ratings stressed that after contracting by an estimated 0.6% last year, they expect that real output will recover robustly, with forecasted real growth rates of 2.4% this year and 3.1% in 2025. “The recovery will be supported by improvement in real income as inflation recedes. (…) Hungary’s long-term growth, which Scope estimates at around 3.5%, is sustained by significant foreign investment in the automotive sector, fostering the emerging electric vehicle industry and supporting broader environmental goals.

Substantial foreign investments in battery production are expected to attract more investment, enhance job creation, technological advancement, and bolster exports. “

Additionally, the rating agency emphasized that Hungary’s BBB credit ratings are “…further bolstered by the robust structure of external and public liabilities.”

Fact

In addition to Scope Ratings, Fitch Ratings and Moody’s also gave the country high ratings and recommended it for investment. Last October, Fitch Ratings predicted that the Hungarian economy would grow steadily from this year onwards, and expects this to help reduce the country’s debt ratio. Moreover, the international rating agency also mentioned that they expect inflation to slow sharply. In Moody’s latest financial report, also published in autumn 2023, the agency noted that the Hungarian economy is about to return to a high growth path in 2024, while the government is significantly reducing the budget deficit and public debt.

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Via Magyar Nemzet; Featured image via Facebook/Mercedes-Benz Gyár Kecskemét