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After Standard & Poor’s positive report in April, Moody’s continues to recommend Hungary for investment with a stable outlook, reflecting the high level of confidence in the country, the Ministry for National Economy announced in a statement.
The ministry stressed that Hungary’s image in the international financial markets is favorable, and the popularity of Hungarian government bonds is undiminished. Strong investor and market confidence is underpinned by successful bond auctions and continued inflows of foreign direct investment (FDI). For instance, the largest German car manufacturers and high-tech electric car companies such as BYD and CATL are also investing in Hungary.
The country’s financing situation is stable and secure, and the government is committed to tight fiscal management and to reducing the budget deficit and public debt. The twin deficits have been eliminated and Hungary’s external trade balance is improving steadily, reaching a record high in the first quarter of 2024, the ministry said.
Fiscal balance and restarting economic growth go hand in hand. Therefore, after successfully curbing inflation, the government aims to restart economic growth in 2024 and further increase it in 2025, with GDP growing by 2.5 percent in 2024 and 4.1 percent next year, the ministry added.
On a quarterly basis, Hungary’s economy grew at the fourth fastest pace in the European Union,
the statement reads.
The gradual resumption of growth is being helped by the fact that real wages have been rising steadily for six months. Rising real wages have started to help consumption recover and the cautious motive to spend has started to unwind, as reflected in three months of increasingly dynamic growth in retail sales. Also contributing to growth is the tourism boom, with Hungarian accommodation establishments recording around 10 million guest nights between January and April 2024.
Lending is picking up, with the contracted amount of new loans to households and businesses showing double-digit growth in the first two months of this year. Investment loan demand in the SME sector has been rising steadily for four quarters now, and most banks expect loan demand growth in the corporate sector to continue in the next six months, they said.
The government is working to ensure that Hungary’s development level reaches 90 percent of the European Union average by 2030,
and the ministry has developed the cabinet’s new competitiveness strategy to achieve this, the statement concludes.
Finance Minister Mihály Varga also shared the news in a video posted on Facebook.
Varga said that the credit rating agency’s analysis is positive about the government’s efforts to reduce the budget deficit and public debt.
They are appreciative of the structure of the Hungarian economy and its strong growth prospects. They underline that expanding investment, stronger exports, and consumption could also boost the economy’s performance in the coming period,”
he says in the video.
“Although war is raging in the neighborhood and EU competitiveness is declining, all three credit rating agencies recommend Hungary for investment and they rate our country two notches higher than at the beginning of the last decade,” the Minister added.
Via MTI, Featured image: Facebook/Audi Hungaria Győr