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 »
By Tamás Pesuth, Head of Economic Research, Nézőpont Institute
“Hungary is a small country, but it looms larger on investors’ screens.” So the Financial Times wrote at the beginning of February this year, while calling the governor of the National Bank of Hungary (MNB) “a maverick.”
As György Matolcsy marked his first year in office today, a more rounded appraisal of his work is required. The FT article looked mainly at the forint exchange rate and the low base rate in reaching its “maverick” judgement. Continue reading »
Nothing like a foreign policy crisis to concentrate the mind.
Poland’s potential adoption of the euro, which had been pushed off to the end of the decade under political, economic and constitutional difficulties and lacklustre public support, has been given a jolt of energy by Russia’s creeping invasion of Crimea. Continue reading »
Predicting what the Hungarian central bank is going to do is becoming something of a fools game. Last month, the bank cut rates for the 18th time in a row. So far, so predictable – except the bank changed from 20 basis point cuts (as it had used five times previously) to 15bp.
On Tuesday, the bank cut again – a 19th consecutive cut – but confounded most analysts who had predicted that the weakened currency would give the MPC reason to reduce by a smaller margin. No chance – the bank stuck to its new 15bp reduction, dropping rates from 2.85 per cent to 2.7 per cent. Where will it end? 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 »
By Kim Lane Scheppele of Princeton University
Hungary was once the precocious child of post-communist transition, garnering praise for its political and legal institutions. But ever since the Fidesz government of prime minister Viktor Orban came to power in 2010 with a two-thirds parliamentary majority, Hungary has been on a legislative rampage, unsettling the legal order and causing “regulatory uncertainty” through “abundant and unstable new regulation,” as the OECD delicately put it. Continue reading »
Central Europe’s leading economies have strapped on afterburners, with new manufacturing PMI data released Monday showing a strong recovery in Poland, the Czech Republic and Hungary.
In Poland, the region’s largest economy, the improvement in business conditions was the strongest in three years. The headline PMI number, in which anything above 50 marks an economic expansion, came in at 55.4 for January, up from 53.2 in December. 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 »
By Attila Mesterhazy of the Hungarian Socialist Party
At the WEF in Davos, the renowned economist Kenneth Rogoff had encouraging words for Europe’s leaders: he argued that high levels of education, strong innovative capabilities and the rule of law provide the old continent with a solid, long-term basis for development.
In Hungary, unfortunately, it is these very values and traditions which Prime Minister Viktor Orban has most undermined in his disastrous rule of the past three and a half years. Continue reading »
Forint hits 2-year low to the dollar
That’s the forint over the last three years to the euro. On Friday, it came under renewed pressure as seveal other emerging market currencies stabilised after a week of turmoil. 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 »
By Mihaly Varga, Hungary’s Minister for National Economy
“Facts are stubborn things.” This quote, attributed to John Adams, the second president of the United States, has become, in practice, a proverb in Hungary: so I too will rely principally on the facts.
The Hungarian economy was particularly hard hit by the global economic and financial crisis of 2008-09. Hungary was particularly vulnerable because of a fatal combination of the credit-based economic policy practised throughout the previous decade – which continuously increased both external and internal debt – and the economy’s weak growth potential and low employment levels.
But Hungary has proved it is able to recover and stand on its own two feet. Continue reading »
New year, new cut: Hungary’s central bank trimmed its base rate by 15 basis points to 2.85 per cent on Tuesday, a move that surprised analysts only by its size – being the first of its kind after the monetary council turned to 20 basis point cuts in the second half of last year. It brings Hungary’s policy rate to yet another all-time low, down from 7 per cent when the bank starting cutting in August 2012, as inflation stays under control and growth remains a concern. Continue reading »
Viktor Orban, Hungary’s prime minister, along with his Fidesz government, have been remarkably busy this week. They have been talking up a €10bn loan agreement with Russia, signed on Tuesday, to finance two new nuclear reactors, scheduled for completion as early as 2023.
Hungary is about to seal “the best deal for the past 40 years,” with nuclear power the cheapest option for the country, Janos Lazar, Orban’s right hand man in charge of the prime minister’s office told the media on Thursday. Continue reading »