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Mar 12, 2018

Fitch Ratings Affirms Hungary at ‘BBB-‘ with a Positive Outlook

Figures show that Hungary's real GDP growth picked up significantly in 2017 to 4.2 percent, reflecting a combination of favorable external environments

Fitch Ratings has given Hungary’s Long-Term Foreign-Currency and Local-Currency Issuer Default Ratings (IDR) a ‘BBB-‘ with a Positive Outlook.

According to the renowned ratings agency, Hungary’s ratings balance showed strong structural indicators compared with ‘BBB’ medians against relatively higher public and net external debt, a higher level of policy unpredictability and macroeconomic volatility.

"An improving trend for these latter factors is reflected in the Positive Outlook,” the agency said.

Figures show that real GDP growth picked up significantly in 2017 to 4.2 percent, reflecting a combination of favorable external environments, high EU-funded capital spending, strong wage growth and policy stimulus ahead of general elections. Growth is likely to remain around 4 percent in 2018, reflecting a continued strong cyclical upturn.

What’s more, Hungary has a track record of higher economic volatility than the ‘BBB’ median and unorthodox policy decisions, and growth potential is constrained by unfavorable demographics, labor shortages and the expected fall in EU transfers after 2020.

Inflation jumped to 2.4 percent on average in 2017 but remains below the central bank’s target of 3 percent, the agency revealed.