Fitch warns about Hungary's economic situation

According to Fitch, Hungary is heading for a difficult economic phase - regardless of the outcome of the parliamentary elections. The rating agency sees the country confronted with weak growth, rising public debt and a persistently high budget deficit. The next government urgently needs to restore the credibility of its financial policy. The economy has been virtually treading water since 2023. With minimal growth, Hungary is lagging well behind comparable countries. Above all, weak foreign demand, structural problems and low productivity are slowing momentum. Key sectors such as the automotive and battery industries are also not currently providing the hoped-for impetus. Electoral politics weigh on the budget The expansionary fiscal policy prior to the elections is creating additional pressure. Higher government spending has widened the deficit and is making subsequent consolidation more difficult. At the same time, government debt is likely to rise further and reach a level that is considered risky in the long term. There are also external risks: rising energy prices, geopolitical tensions and dependence on imports. The devaluation of the forint is also limiting the scope for monetary policy. In the coming months, the focus will also shift to the assessment by international rating agencies - with possible pressure on creditworthiness. The possible release of frozen EU funds remains a factor of uncertainty. This could ease the situation, but is politically uncertain. Without credible reforms, Hungary faces a phase of sustained economic weakness, according to Fitch. The post Fitch warns about Hungary's economic situation appeared first on ostwirtschaft.de.