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EURHUF at 316: first tentative thoughts on renewed forint strength
HUNGARY · In Brief · 31 Jan 2019

1. EURHUF fell back to around 316 in the last 24 hours, continuing its strengthening trend taken in mid-January. Information available, mainly data from the MNB, suggests that this trend is entirely market driven: especially nonresidents are building up speculative positions in favour of the fori...

Today's Monetary Council: once again no action, no surprise
HUNGARY · In Brief · 29 Jan 2019

The Monetary Council indeed did nothing today, just as analysts expected. They even missed the opportunity to raise their eyebrows a little bit higher, through injecting a pinch of additional hawkishness into the language of the communiqué. Indeed, the statement they put out after the meeting see...

Preview for tomorrow's Monetary Council: raised eyebrows, some hawkish-style talk but no real action likely
HUNGARY · In Brief · 28 Jan 2019

The Monetary Council's monthly rate-setting meeting is scheduled for tomorrow. Analysts do not expect the Council to make any major step towards policy tightening, except for probably refining the language of its communiqué a bit further in that direction, which the press & news agencies might tr...

Wage strike at Audi Hungaria, with a few lessons
HUNGARY · In Brief · 26 Jan 2019

We have seen the first serious strike action of recent times in Hungary this week. Despite a series of recent strike threats from major trade unions, it surfaced at just one company, which is Audi Hungaria, the local subsidiary of the German carmaker operating within the broad Volkswagen group. A...

Nearly excellent current performance, moderately positive medium-term prospects
HUNGARY · Forecast · 18 Jan 2019

In our new quarterly forecast, we do not take into account the possible negative impacts of major international economic, financial or political debacles such as e.g. a potential no-deal Brexit on 29 March. Even though the British parliament’s NO vote to the government’s Brexit proposal a few day...

Important policy statement from the MNB
HUNGARY · In Brief · 16 Jan 2019

Speaking at the Euromoney conference in Vienna, MNB vice governor Nagy said that in case their 'core inflation adjusted for the impact of changes in indirect taxes' indicator reaches or exceeds 3% yoy, the MNB will conclude that inflation has reached the Bank's medium-term target on a sustainable...

Inflation dropped as expected, yet there is enough bad news
HUNGARY · In Brief · 15 Jan 2019

The headline rate of CPI-inflation fell to 2.7% yoy in December from 3.1% yoy in the previous month, in line with consensus expectation. So far the good news...The bad one is that there was more in the total monthly drop of the CPI (by 0.3%) caused by fuel prices (-6.9%) than we expected, whereas...

Headline CPI-inflation expected to have fallen to 2.7% yoy in December
HUNGARY · In Brief · 14 Jan 2019

Tomorrow at 9am BUD time, the KSH is scheduled to publish its consumer price data for December. Analysts contributing to Portfolio.hu's poll expect another sharp drop by the headline rate, to 2.7% yoy from November's 3.1%yoy, and we agree with that forecast. In our own spreadsheet, this result wo...

The Finance Ministry confirmed a series of good news on 2018 fiscal results
HUNGARY · In Brief · 12 Jan 2019

Over the last few weeks, a series of good news on the 2018 government budget results were announced, leaked, rumoured or suggested by various sources. Yesterday, the Finance Ministry confirmed a few of them, minister Varga and state secretary Banai having been the speakers. In the main, they said...

The government sector balance was close to zero again in January-September 2018
HUNGARY · In Brief · 03 Jan 2019

KSH reported the government sector balance, by ESA-2010, i.e. on accrual basis, at a deficit of 0.4% of GDP for the first three quarters of 2018. This was in fact almost the same number as the 0.6% of GDP actual recorded in January-September 2017. The message is that government finances have inde...

Relatively good news for inflation: statutory minimum wages were announced for 2019-2020
HUNGARY · In Brief · 30 Dec 2018

Finance minister Varga announced this morning that statutory minimum wages will be raised by 8% both in 2019 (starting from January) and in 2020. This refers to both existing wage thresholds, the lower one for unskilled labor and a higher one maintained for unskilled labor alike. The news came af...

The European Commission is finally paying its dues, creating abundant liquidity for the government
HUNGARY · In Brief · 23 Dec 2018

Although neither the government, nor the European Commission are specifically saying so, the publicly available cohesion policy data of the latter make it clear that the EU Commission has just paid very substantial amounts of transfers due to Hungary. Our own estimates show the payments, in Decem...

Correction of fuel prices amid rising core inflation creates policy uncertainty
HUNGARY · Report · 18 Dec 2018

Q3 GDP growth was revised higher in the second estimate, pushing the seasonally adjusted year-on-year rate slightly above 5%. Growth is increasingly propelled by domestic demand rather than the export-driven industrial sector, which suggests that the trade balance must significantly deteriorate. ...

The MNB received help from tumbling fuel prices in November
HUNGARY · In Brief · 11 Dec 2018

The Statistical Office (KSH) this morning reported November CPI-inflation at -0.3% mom, 3.1% yoy, the latter sharply down from the six-year high of 3.8% yoy, measured in the previous month. Portfolio.hu, the leading economic media domestically, called the news as a major positive surprise, agains...

Robust short-term performance but major fundamental risks for medium term
HUNGARY · Presentation · 07 Dec 2018

Hungary’s current macro performance appears robust, with real GDP growth of 4-5%, low unemployment and low inflation by emerging market standards. However, major problems for the medium term include growth and a budget heavily reliant on unsustainable EU grants, inconsistent labor markets and gro...

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