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Standard & Poor’s Is Confident in Hungarian Economy

MTI-Hungary Today 2023.07.10.

Standard & Poor’s has reaffirmed its ‘BBB-‘ rating for Hungary and continues to recommend Hungary for investment with an unchanged stable outlook.

The Ministry of Finance’s statement sent to MTI on Friday evening recalled that two weeks ago, Fitch Ratings made a similar affirmative decision, maintaining Hungary in the investment grade despite the war crisis. This shows that the rating agencies remain confident in the Hungarian economy and appreciate the government’s measures to improve balance indicators, they pointed out.

According to the ministry’s statement, in its assessment issued late Friday, Standard & Poor’s said that thanks to disciplined fiscal and monetary policies, inflation is on a downward trend and will fall to single digits by the end of the year, while the current account balance has improved significantly. As they say,

a number of factors are strengthening the economy.

Among others, the labor market remains strong, with high employment despite the dangerous international environment, while unemployment is still below four percent.

In addition, the performance of agriculture alone could lead to economic growth of one percent after last year’s historic drought, allowing the Hungarian economy to avoid recession this year, according to the document.

Photo: Pexels.com

Significant foreign investment is adding substantially to export capacity this year, so exports could expand by as much as four percent this year, according to S&P. The experts underline the government’s commitment to reducing the budget deficit: they believe that

despite the challenges, the deficit will be kept below four percent this year and that public debt will continue to decline over the next two years.

The rating agency stresses that it still expects Hungary to reach an agreement with Brussels on the EU payments it is due. Experts say reforms are underway, but acknowledge that the final release of funds will depend largely on the political mood in the EU. They add that

they expect the inflow of EU funds to be matched by a steady increase in foreign investment, according to a ministry statement.

The three major international credit rating agencies all recommend Hungary for investment thanks to their work over the past decade, and they maintain a rating two notches higher now than 10 years ago, the PM’s statement stresses.

Fitch Affirms Its Investment Grade Rating on Hungary
Fitch Affirms Its Investment Grade Rating on Hungary

The international rating agency expects the Hungarian economy to grow at an average rate of three percent in the coming years.Continue reading

Featured image: Facebook/Standard and Poor’s

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