Rating agency Fitch said an economic action plan recently unveiled by Hungary’s government contained policy compromises between economic growth and fiscal consolidation in an analysis published on Thursday. “Hungary’s recently announced new economic action plan highlights policy trade-offs between fiscal consolidation and the government’s commitment to social support and growth performance targets,” Fitch said.
“It is unclear if the proposals will strengthen growth prospects sufficiently to reduce challenges to medium-term fiscal consolidation – challenges that could increase should a recovery of external demand lag,” it added. The government’s plan aims to raise purchasing power, create affordable housing and develop SMEs. Fitch noted that the negative outlook on Hungary’s BBB sovereign rating reflected risks around the policy environment and the performance of public finances.
The recovery in economic activity following last year’s GDP contraction will be an “important driver” behind forecast deficit reduction over the next four years underpinning a recovery of budget revenue, it added. Fitch puts Hungary’s GDP growth at 3.4pc in 2025 and 3.5pc in 2026.
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