Hungary

By Zsolt Kuti and Imre Ligeti of the National Bank of Hungary

The upgrades in Hungary’s credit outlook last year, first by Standard & Poor’s and then by Moody’s, represent a turnaround in the history the country’s credit ratings. The earlier, negative trend was halted, and all three major credit rating agencies now assign a stable outlook to Hungarian debt.

We think this presages an upgrade for Hungary. Here is why. Read more

By Krisztián Szabados and Péter Krekó of the Political Capital Institute

Last week’s guest post by Balázs Orbán on Hungary’s foreign policy and the visit of Vladmir Putin adds little to the official government line – which is surprising, given that the visit demonstrated Budapest’s support for the Russian president when his country is under European Union sanctions for backing secessionist militants in a bloody insurrection in Ukraine. Read more

By Balázs Orbán, Századvég Foundation

Hungary’s foreign policy machine is up, running and making waves: in a matter of weeks, it has helped engineer three important meetings.

First, Viktor Orban, the Hungarian prime minister, hosted Angela Merkel, the German chancellor, in Budapest. Next, he flew to Kiev for talks with Petro Poroshenko, the Ukrainian president. This Tuesday, Orban will welcome Vladimir Putin, the Russian president, to the Hungarian capital.

Each of these visits is of major significance for Hungary, a Nato member which shares a common, if relatively short, part of its eastern border with crisis-ridden Ukraine. Read more

Before Hungary’s general election last April, Viktor Orban, the prime minister, began to laud the advantages of a two-thirds “super majority” in parliament. It gave Hungary a big advantage over its central European peers – its competitors for foreign investment – because it allowed for “quick decision making”.

Orban got his super majority. But “quick” can also mean hasty, ill-considered and lacking in consultation – as Hungary’s logistics sector is finding out. Read more

Hungarian politics, like the Hungarian language, tends to be a mystery to outsiders at the best of times.

The arrival of the second Fidesz government of Prime Minister Viktor Orban in 2010 added more layers to the ‘paprika curtain’ already there by linguistic default: the rapid-fire PM generally avoids facing the foreign media (certainly en mass) and when travelling overseas invariably speaks in Hungarian – despite his competence in English – to address his real target audience, ie the viewers back home. Read more

Mercedes-Benz launched production of its new compact CLA Shooting Brake at Kecskemét, central Hungary, on Tuesday, with Viktor Orbán, the prime minister, driving the first car off the assembly line into the media spotlights as part of the celebration.

“When I was a boy, we had a saying about having an egg every day: here in this factory, they have a new model every year,” Orbán said as an introduction to his address to the gathering of Mercedes-Benz glitterati and employees. “As I’ve heard, there are very few plants where you have a new model every year,” he quipped. Read more

Those who relish irony will have found much to savour in the Swiss central bank’s actions on Thursday when, as Mohamed El-Erian comments, we were reminded of the dangers of substituting financial engineering for real economic reform.

The choicest item is the way that Hungary’s authorities have emerged, as analysts at Commerzbank put in on Friday morning, looking like “financial experts of the highest calibre” – not an opinion often heard on financial markets. Read more

This is what happened to the Hungarian forint and the Polish zloty, measured against the euro, after the Swiss central bank abandoned its currency peg on Thursday.

Source: Thomson Reuters

 Read more

It’s early days in 2015 but already there is positive news on Hungary, at least according to official government sources. Fresh jobs data reveal “the number of people in employment up by some 200,000 year-on-year” the economy ministry boasted this week – erring modestly on the positive side (the actual figure was 188,000). Meanwhile, Gyorgy Matolcsy, governor of the central bank, has been busy lobbying for an upgrade of the country’s credit ratings.

Hungary, he told MTI, the state news agency, is currently on a “stable and predictable path” as a result of the changes in economic policy implemented (in large part by himself as then economy minister) since 2010 – the year the Fidesz government of prime minister Viktor Orban regained the reins of power. Read more

Timothy AshBy Timothy Ash of Standard Bank

A new initiative by the government of Viktor Orban in Hungary appears to be “right-sizing” the country’s banking sector, boosting its efficiency and cost effectiveness as a means to kick start lending. The agenda also appears to be to promote the development of a domestically owned banking sector – 70 per cent domestic ownership is being targeted. To achieve this, state ownership is being promoted as a short term measure to help deliver on the longer term plan.

Reviewing this programme, the obvious question is, what are the Hungarian authorities trying to achieve? Read more

Airline passengers to Hungary, be warned: Budapest’s Liszt Ferenc International airport is having its Woodstock Week, with anything from 200 to 250 youths – with associated rucksacks, tents, sleeping bags and tin pots – camping out in the terminal every night since Sunday awaiting flights.

“We expect them to be here for three to four days. They’ll be gone by the end of the week,”” Mihaly Hardy, airport spokesman, told beyondbrics. Read more

Hungary’s economy expanded by 3.9 per cent in the second quarter of 2014 compared with the same quarter last year, helped by strong performances in the manufacturing and construction sectors, according to preliminary data from the statistical office released on Thursday.

Coming on top of growth of 3.5 per cent in the first quarter, the latest data indicate first half growth of 3.7 per cent, although this could be adjusted once the detailed data are available in early September. Read more

Under communism, it was the norm for state companies and institutions in central Europe to own holiday homes: come summer, reluctant and poorly paid comrade workers could enjoy the proletarian splash with one another from the Baltics to Burgas.

But after 1990, as managers sought to focus on core activities in the drive to a market economy, such real estate was mostly divested – often at attractive prices to those in the know.

Now, guess what? The company resort is making a comeback – at least in Hungary, where local weekly hvg has unearthed a story that the central bank (MNB) is buying up property for the good of its very own staff. Read more

A long-running dispute between Croatia and Mol, the Hungarian oil and gas company, over control of Ina, Mol’s Croatian counterpart, has flared up again.

Zagreb is seething over a statement issued by Mol after talks on Friday which said the latest round of negotiations had achieved precisely nothing. The ministry told beyondbrics the Mol statement was “a lie” and threatened to publish a recording of the negotiations unless Mol withdraws it. Read more

Hungary’s government said on Thursday it had agreed a deal to buy MKB, one of the country’s largest commercial banks with more than 80 branches, from BayernLB, its German owner. The state will pay €55m for MKB and BayernLB will waive claims of €270m in receivables.

The deal marks what Mihaly Varga, Hungary’s economy minister, said was “the first step” in increasing Hungarian ownership of the country’s commercial banks. Viktor Orban, prime minister, has long insisted that he wants to see “at least” 50 per cent of the Hungarian banking system in domestic hands. Read more

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. Read more

As Argentina’s sovereign debt soap opera dragged on, this week saw another legal judgement on toxic debts running into billions of dollars.

Yet while the ruling by Hungary’s supreme court on foreign currency mortgages could cost banks up to €3bn, the full implications are still to be fleshed out. One possibility is the retroactive rewriting of contracts – partially bailing out homeowners who took a failed punt on exchange rates. Read more

Central and Eastern European local currency bonds lifted following a widely-anticipated move by the European Central Bank to cut key interest rates in a bid to anchor the eurozone’s tentative economic recovery.

The confirmation of cheaper money across the continent sent investors searching for riskier assets, further pushing down yields on Turkish, Hungarian and Polish bonds which have rallied over the last month. Read more

Manufacturing in central Europe’s leading economies continued to grow in May, with PMIs in Poland, Hungary and the Czech Republic indicating continued expansion, although Poland appeared to show some impact from declining exports to Russia and Ukraine due to the fraught political situation in those two countries. Read more

As the European Central Bank (ECB) teases investors with hints of monetary stimulus measures, expectations of a rate cut are already helping boost appetite for emerging market debt on the continent.

Yields on Hungarian forint bonds dropped yesterday following a heavily oversubscribed bond auction, and since the start of the month Polish and Romanian local currency bonds have also rallied. Read more