Unsustainable Forint Strength

HUNGARY - Forecast 13 Apr 2015 by Istvan Racz

Executive Summary Analysts have been essentially right in their recent assessments that the Hungarian economy is likely to experience a pretty good year in 2015, with reasonably high growth, very low inflation, combined with limited fiscal deficit, a slightly decreasing government debt ratio and a continued big external income surplus. They also seem to be right in saying that the forint will enjoy significant support from these fundamentals, from some improvement in the country’s sovereign credit rating and from monetary loosening by the ECB. However, it would be dead wrong to conclude fro...

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