A stable and poor faith in our economy

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

A Finance Ministry statement sent to MTI on Friday evening said Fitch Ratings made a similarly firm decision two weeks ago, retaining Hungary at investment grade despite the war crisis. They pointed out that this shows that rating agencies are confident in the Hungarian economy and appreciate the government’s measures to improve balance indicators.

In an assessment released late Friday, Standard and Poor’s said inflation is on a downward trend and will decline to single digits by the end of the year, while the current account balance has improved significantly, thanks to disciplined fiscal and monetary policies, according to a ministry statement. As they say,

Many factors are strengthening the economy.

Among other things, the labor market remains strong, with high employment despite the precarious international environment and unemployment still below 4 percent.

Additionally, the performance of agriculture alone could lead to economic growth of 1 percent after last year’s historic drought, allowing the Hungarian economy to avoid recession this year, the document says.

Substantial foreign investment is adding significantly to export capacity this year, so exports are expected to expand by 4 percent this year, S&P said. Experts underline the government’s commitment to reducing the budget deficit: they believe in it

Despite the challenges, the deficit will remain below 4 percent this year and public debt will continue to decline over the next two years.

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

According to a ministry statement, they expect the influx of EU funds to match a steady increase in foreign investment.

The three main international credit rating agencies all recommend Hungary for investment, thanks to the work they have done in the last decade, and they now maintain a rating two points higher than 10 years ago, the Prime Minister’s report emphasizes.

Featured Image: Facebook/Standard and poor