The National Bank of Hungary (MNB) surprised the markets on Tuesday by lopping 20 basis points off its policy interest rate to leave it at 2.1 per cent a year, a new record low.

But Gyorgy Matolcsy, central bank governor, said Tuesday’s cut marked the end of the bank’s two-year cutting cycle. Continue reading »

Viktor Orbán, the Hungarian prime minister now beginning his second successive term in office, named his cabinet on Thursday with seven out of 10 ministers maintained in a government that is expected to emphasise continuity.

“Out of the 10 ministers named today, seven are the same as in the (previous) Orbán government [so] the prime minister has kept his promise: the government will simply continue what they were before the elections,” Tamás Boros, director of Policy Solutions, a Budapest political think tank often critical of the government, told beyondbrics. Continue reading »

It goes on, and on… and on. Hungary’s central bank trimmed its base rate once again on Tuesday – this time by a third consecutive reduction of 10 basis points – to leave the key rate at 2.4 per cent.

The latest move, largely priced in by the markets, means the bank has cut the rate by 460 basis points since its cycle of easing began in August 2012. Continue reading »

Almost ten years to the day after its first flight, Wizz Air, a low-cost airline centered on central and eastern Europe (CEE), said on Thursday that it plans to raise €200m by listing on the London Stock Exchange in June to raise funds to expand its operations.

Jozsef Varadi, Wizz Air chief executive, speaking via video to a press conference in Budapest, said Wizz Air Holdings, the parent company based in the Channel Islands, would use the cash to strengthen its balance sheet and expand operations.

The airline sees considerable potential for further growth in its core CEE market, given that the ‘propensity for air travel’ in the region is currently just 0.36 seats per capita, compared to the western European averages of 1.58 seats per capita. Continue reading »

The Hungarian economic comeback really is underway – or so it would seem, given the release of first quarter preliminary figures from the statistical office, which put economic growth at 3.5 per cent, up from 2.7 per cent in the fourth quarter of 2013.

True, when adjusted for calendar and seasonal effects, the figure is a tad more muted, at 3.2 per cent, and the final figures could be reviewed when released next month. Regardless, the result is “extraordinary”, according to Gergely Gabler, senior analyst with Erste Bank in Budapest. Continue reading »

It’s been hovering at or near zero for a good six months but in the cold light of day it’s still a bit difficult to take it in. Inflation in Hungary – which for two decades after the collapse of communism was often one of the gloomiest economic indicators in the monthly roster – has moved into negative territory; in other words, deflation. Continue reading »

Will he, won’t he… get it?

That was the question on Magyar political analysts’ lips on Monday – he being Viktor Orban, Hungary’s go-go, rapid-fire prime minister, “it” being the two-thirds parliamentary vote he most definitely covets for a “super-majority” again during his second term in office.

He’s on the brink – it depends on a few thousand votes cast outside the country or in other districts. But regardless of this, the one time anti-communist student firebrand is sure to be at the helm in Budapest for four more years, and still with a commanding parliamentary majority. Continue reading »

Has the Great Magyar Rate-Cutting Cycle come to an end? To many, it looks that way, following the central bank’s decision on Tuesday to snip just 10 basis points off the base rate, to leave it at 2.6 per cent a year.

And even this trim, the smallest made so far in a 20 month long trimming spree, is possibly more symbolic, an effort to keep up the momentum in front of elections, scheduled on April 6, just 12 days hence. Continue reading »

Viktor Orban, Hungary’s populist prime minister, has promised a continuation of the policies enacted in the past four years if his Fidesz party wins the country’s general elections, set for April 6.

Orban – who is well ahead in opinion polls against a left-liberal coalition cobbled together at the eleventh hour – told the Hungarian chamber of commerce on Wednesday “we’ll [just] continue,” before spelling out a 10 point economic programme that includes pledges to increase the proportion of domestically held government debt, accelerate industrialisation, boost Hungarian ownership in the banking and agricultural sectors and further decrease energy costs to support Hungarian competitiveness. Continue reading »

Inflation watching in Hungary is getting tiring on the eyes: following an unprecedented zero change in prices in January, annual inflation crept up by a whole 0.1 per cent in February, according to figures released on Tuesday.

The figures reinforce the belief that the central bank will continue with its marathon rate-cutting cycle with at least one more cut later this month. Continue reading »

Slovenia finished February on a surprise high, with news that the economy in the fourth quarter of 2013 expanded by 2.1 per cent year-on-year – the first three months of growth after eight consecutive quarterly declines.

The late upturn, however, proved insufficient to pull the year’s performance into positive territory. Grim data earlier in the year – the first three months was 4.6 per cent down on 2012 – meant the economy in 2013 contracted by 1.1 per cent. Still, that’s a whole lot better than the 2.5 per cent slump in output for 2012. Continue reading »

Only last week, Nomura’s Peter Attard Montalto warned that Hungary’s central bank “appears to be playing with fire” in its insistence that “Hungary is different” and that – with inflation at all time lows – it can continue its rate cutting policy regardless of the bigger world out there.

Montalto published that on Thursday, when the forint had recovered from the worst of the buffeting it received earlier in the week, to trade in a range around Ft308 to the euro. Continue reading »

The markets just aren’t reading the script, it seems. On Thursday the Hungarian economy ministry issued its latest upbeat economic release: “The number of people in work exceeds 4m” – that’s 235,000 more in work than when the Fidesz government took over in 2010, it announced in triumph. Minister Mihaly Varga was equally upbeat in a guest post on beyondbrics this week.

So if Hungary is in such good shape, how come the forint has been so badly hit? Continue reading »

The Hungarian forint set off on a roller coaster ride on Wednesday, buoyed at first by optimism and then buffeted by a sell-off across emerging market currencies, exacerbated by dovish signals from policy makers at home. The forint fell to as much as Ft310 to the euro, its weakest level in more than a year and a drop of 2.1 per cent from Tuesday’s close of Ft303.6. Continue reading »

Mihaly Varga, Hungary’s economy minister, may champion a recent turnaround in his country’s economy and the unorthodox methods he argues have achieved it. But coincident with his guest post on beyondbrics on Monday, the OECD released its latest report on Hungary.

It warns that Hungary will struggle to achieve anything beyond “meagre” economic growth unless it addresses a long list of issues, including the creation of a more predictable tax and business environment, stronger, more effective and even-handed treatment by regulators and competition agencies, and support for the banking sector to lend at commercially competitive rates. Continue reading »