articleimg-1
Apr 10, 2018

Leading credit agency says Fidesz win means strong growth this year

Fitch Ratings, one of the ‘big three’ credit rating agencies, has said the ruling alliance’s sweeping win will ensure economic policy continuity

Fitch Ratings, one of the ‘big three’ credit rating agencies, has said the ruling alliance’s sweeping win will ensure economic policy continuity.

The agency said the election win will support strong growth this year, though risks of macroeconomic imbalances emerging had increased in the wake of rapidly rising wages and housing prices. “Tighter [monetary] policy is reflected in our 3 percent 2019 growth forecast,” it said.

Meanwhile, financial consultancy Capital Economics has said a more general economic challenge facing Fidesz in its third term is the late stage of the economic cycle.

After several years of rapid economic growth, capacity constraints are starting to mount, it said. The consultancy added that although inflation has been soft in recent months, it is likely to rise over the course of the coming parliamentary term.

Economic growth is likely to be constrained by Hungary’s potential GDP growth rate, which is around 2 to 2.5 percent, and there is a growing risk of monetary policy being kept too loose for too long, it added.