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Think potholes in NY are bad? You haven’t been to Hungary
I read the news today, Oh boy
200 hundred holes in roads in Hungary,
Unlike Blackburn, these holes are not so small,
They’ve had to map them all,
Enough to drive Generali up the wall.(Apologies to Lennon & McCartney. ) Continue reading »
Hungary’s GDP: welcome surprise
Bad GDP figures from the eurozone on Wednesday but there’s a pleasant surprise from an unexpected quarter: Hungary’s economy contracted by only 0.9 percent in annual terms in the first three months.
Doesn’t sound like good news. But investors had been expecting a drop of as much as 1.4 per cent. With hopes of further improvement in the rest of 2013 buoying the Budapest market, the forint gained 1 per cent against the euro. Continue reading »
Hungary’s retail sales: no fairytale here
Hungary’s “fairytale economy” – as former economy minister György Matolcsy famously described it last year to CNN – remains, well, exactly that – fairytale. Despite the emphasis by government spin-doctors on lower bond yields and the strengthening forint, life for your average Imre and Ildikó just doesn’t seem to be getting any easier – as the latest figures for consumer spending show. Continue reading »
Austerity losing ground in CEE
The global battle between Austerians and Spendanigans has opened a front in central Europe and the Spendanigans appear to be gaining ground.
In an interview with the FT, Robert Fico, the centre-left prime minister of Slovakia, came down firmly on the side of encouraging growth and concentrating less on belt-tightening. Continue reading »
[video] Matolcsy’s mortgage problem
Foreign currency debt – that’s the problem facing György Matolcsy, Hungary’s central banker, known for his unorthodox policies. More than half the household and company debt in Hungary is not in forints. Peter Attard Montalto, emerging markets economist at Nomura, discusses with deputy emerging markets editor Jonathan Wheatley how Hungary is tackling this and the resilience of foreign investors despite such risks.
Hungary: the cuts keep coming, but how long can it last?
It’s getting rather routine: another rate setting meeting at the Hungarian central bank, another rate cut of 25 basis points down to another record low rate. On Tuesday this pattern took the rate down for the ninth consecutive month to 4.75 per cent.
About the only upset in this otherwise well-rehearsed show was was a mistakenly sent alert on Bloomberg terminals that the rate had been reduced to a mere 1 per cent. Cue a flurry sell off in the forint, before the damage could be repaired (see chart) – and business was back to normal, with the Hungarian currency trading at Ft 299.48 to the euro at 5pm Europe time. Continue reading »
Hungary’s rose-tinted glasses
Hungary is doing just fine for now, at least that’s the thrust of the news from the government’s PR office. Of late, it seems Viktor Orbán, the adrenalin-high prime minister, has been cutting ribbons for a living; a railway rolling stock builder expanding here (Stadler – a Swiss producer, in Szolnok, with €13.6m in further investment) – a children’s toy company there (Lego – the Danish plastic brick maker, in Nyíregyháza, with a whacking €200m investment job) were headline stories last week. Continue reading »
Hungary: Wizz Air looks east with China leasing deal
Wizz Air, which bills itself as the largest low-cost, low-fare airline in central-eastern Europe, said on Thursday that that it had struck a “pre-delivery payment financing and sale and leaseback agreement” with ICBC Financial Leasing, of China, for eight new Airbus A320 aircraft.
The A320s, due for delivery in 2013 and 2014 and carrying a headline price tag of $700m, represent a jump of a fifth in the current fleet of 40 such aeroplanes operated by Wizz Air. Continue reading »
Hungary: inflation at record low, but the devil is in the detail
The devil being in the detail is a phrase with much resonance in Hungary – especially when, as on Thursday, things look rather too good.
“Inflation at record low” said the headlines. Indeed, annual consumer price inflation fell to 2.2 per cent in March, well below the consensus of 2.5 per cent and the lowest ever recorded since the transition to a market economy. Continue reading »
Hungarian c. bank deputy governor resigns in protest
Julia Király, deputy-governor of the Hungarian central bank (pictured left), resigned on Monday saying that moves made by György Matolcsy, the newly appointed governor, were damaging both the bank’s hard-earned credibility and the national economy over the longer term.
Last week Matolcsy announced a new central bank funding scheme which aims to get cheaper lending to small businesses and also reduce their exposure to euro-denominated loans. Continue reading »
Hungary: mixture of relief and uncertainty at new c. bank plan
The Hungarian currency is a bit like the famed “Grand old Duke of York” of late – the Duke who according to the traditional nursery rhyme, marched his 10,000 men up the hill, then back down again, all to no avail.
The new “postmodern” monetary policy unveiled on Thursday was widely – and worriedly – anticipated, but there was something of a relief rally afterwards. Where we go from here? It’s anyone’s guess. Continue reading »
Guest post: will Hungary’s risky new postmodernist policy work?
By Peter Attard Montalto of Nomura
The Hungarian central bank has on Thursday embarked on a risky strategy of postmodern policy in a bid to boost growth through lending via the provision of liquidity. It is labelled as a “Funding for Growth Scheme”.
So will it work? And longer term, what does it mean for the forint? Continue reading »
[UPDATE] Hungary aims to boost bank lending with zero rates
Hungary’s new central bank president Gyorgy Matolcsy has unveiled a new 250bn forint (€831m) lending plan which allows banks to borrow at zero per cent from the central bank.
The banks can then lend to businesses with the funds at a maximum 2 per cent rate of interest, a measure aimed at getting loans to small and medium-sized businesses to help them replace their foreign currency loans with forint loans. The forint initially depreciated on Thursday, to around 303.8 to the euro, before reversing to around 300.6 to the euro at 1pm CET, an appreciation of 0.6 per cent. Continue reading »
Hungary: renationalisation speeds up
Hungary’s fast-expanding re-nationalisation programme, led by former anti-Communist activist Viktor Orban, on Thursday took a great leap forward.
MVM, the state electricity company and emerging energy combine, is to pay around €870m for full control of E.ON Földgáz Trade and E.ON Földgáz Storage, the Hungarian gas trading and storage companies currently owned by Germany’s E.ON. Continue reading »
Corporate watch: Russia, the unlikely jewel in OTP Bank’s crown
Hungarian companies are shy about expanding abroad – fewer than 10 per cent do so, according to a survey of chief executives by PwC.
OTP Bank, for one, bucks that trend: seeking a bigger role in the region at the turn of the millennium, it dipped its toes into the water when it bought a small bank in Slovakia, before swooping into Bulgaria – and scooping Austria’s Erste Bank in the process – to pick up DSK, the country’s savings bank, in 2003. It has since moved into Croatia, Romania, Serbia, Montenegro, Ukraine and Russia, and boasts some 13m customers and 1,500 branches in nine countries.
Are these forays abroad working? Continue reading »
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