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COUNTRY INSIGHTS

Higher growth, more employment means higher non-fuel inflation
HUNGARY · Forecast · 18 Oct 2018

GDP growth is still likely to decelerate from its recent cyclical peak between now and end-2020, but we see now higher growth rates for the next two years than we did three months ago, something similar to the current forecast from the MNB. This revision is based on the rather strong and probably...

Yoy consumer inflation likely to rise temporarily in September
HUNGARY · In Brief · 08 Oct 2018

KSH is scheduled to put out its CPI-inflation data for September at 9am Budapest time tomorrow. We expect the yoy headline rate to rise further, to 3.6% from August's 3.4%. This forecast is based essentially on three factors:(1) a likely 1.4% mom rise by fuel prices, on the back of a 1.5% mom inc...

Good news and bad news about fiscal policy
HUNGARY · In Brief · 03 Oct 2018

There seems to be indeed some excitement about the end-2018 government debt ratio, judged by the flow of recent announcements by high-ranking officials, and also the data work carried out by the statistical office (KSH).To start with, the KSH revised its historical GDP numbers upwards the other d...

Year end is coming: the ÁKK is positioning the debt ratio
HUNGARY · In Brief · 30 Sep 2018

As usual, year end coming soon, the usual question is raised again: how on earth will the government manage to generate a further small reduction of its debt ratio by the last day of December. In 2018, this problem looks a little bit more serious than last year. The central government's debt, the...

A further bit of a problem with EU transfers
HUNGARY · In Brief · 26 Sep 2018

We have written a lot about the prospective problems with Hungary's access to EU transfers in the next medium-term budget period, i.e. between 2021-2027. However, it seems now that access to part of the country's EUR25bn EU development transfer quota, set for the current seven-year budget period ...

PM Orbán has just passed an important hurdle in EU politics
HUNGARY · In Brief · 23 Sep 2018

Somewhat counter-intuitively, the catastrophic vote against Hungary in the European Parliament on September 13, which we wrote about in our September report, has also brought about something positive for PM Orbán's government, implying relief in an important question. One scenario after the vote ...

Yes, but what the hell did the MNB do yesterday?
HUNGARY · In Brief · 19 Sep 2018

Analyst views on what exactly the MNB did yesterday seem to differ significantly, depending on who one is talking to. This is not necessarily the fault of respondents, but much more the problem of the significantly overburdened and not entirely coherent system of policy tools maintained by the MN...

Credit upgrade to BBB is not happening yet
HUNGARY · Report · 17 Sep 2018

In August, both Fitch and S&P failed to upgrade the government from BBB-/Positive in their pre-announced review dates, in line with market expectation but contrary to the hopes of high-ranking officials in Hungary. We think that no upgrade from a major agency is likely any time soon, especially b...

The European Parliament voted to initiate an Article 7 procedure against Hungary
HUNGARY · In Brief · 12 Sep 2018

For the first time in its history, the European Parliament today voted to call the European Council to start an Article 7 procedure against a member country, and this member happens to be Hungary. As well-known to most readers, the Article 7 procedure is a reconciliation and sanctioning mechanism...

MNB expects CPI-inflation to have peaked at 3.4% in July
HUNGARY · In Brief · 10 Sep 2018

Tomorrow at 9am BUD time, the KSH will come forward with its August CPI-inflation data. Analysts expect 3.3% yoy, slightly down from the 3.4% actual measured for July. The MNB previously predicted the same outcome, somewhat ambitiously adding that the yoy headline rate may have actually peaked in...

Q2 GDP growth stronger than first estimate on agriculture and inventories
HUNGARY · In Brief · 05 Sep 2018

The second estimate of Q2 GDP, out this morning, has brought about 1% qoq, 4.6% yoy on sda basis, stronger than 0.9% qoq, 4.4% yoy first release. Growth still decelerated from the 4.7% yoy of Q1 (and 4.9% of Q4 2017), but only marginally, which is definitely a positive surprise.Regarding the deta...

Positive comment from Moody's on the MNB's new prudential rules for mortgage lending
HUNGARY · In Brief · 28 Aug 2018

In a recent report on the vulnerability of emerging economies in the light of financial market corrections, Moody's made some praising comments regarding the MNB new prudential rules for banks' mortgage lending, which were out a few days ago and will take effect in October 2018. According to thes...

Fiscal data for H1 signify the need to tighten policy
HUNGARY · In Brief · 24 Aug 2018

A few days ago, the MNB reported the general government's net financing requirement for Q2 at 2.2% of GDP, which implies 1.4% of GDP for the whole of H1. These figures are compiled according to ESA-2010, just as the general government balance, the main fiscal policy indicator for EU-members, but ...

Monetary Council rate-setting meeting: no change, no surprise
HUNGARY · In Brief · 21 Aug 2018

There was no policy change whatsoever coming out of today's monthly rate-setting meeting of the Monetary Council. Rising central bank interest rates, oil market events, trade war prospects and Turkish events were all mentioned by the communiqué, as factors requiring cautious watch and considerati...

An interest rate hike by ÁKK - outsourcing monetary policy
HUNGARY · Report · 16 Aug 2018

Inflation maintained its ascending trend in July, moving up a bit faster than expected. Fuel prices still played an important role, but there were also non-seasonal increases in the area of industrial products, on rising producer price inflation in that sector. Unlike in previous months, all core...

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