Analysts: Brexit could slightly slow down Hungary economic growth – UPDATE

Budapest, June 24 (MTI) – The British vote to leave the European Union could slightly slow down economic growth in Hungary, analysts told MTI in reaction to Brexit on Friday.

Takarékbank analyst Gergely Suppán said that a reduction in EU funding should not be expected for the time being because it is fixed by contract and Britain’s payment obligations will be maintained until its exit is completed, possibly even until the end of the 2014-2020 financing period.

Erste Bank macroeconomic analyst Gergely Urmossy said despite the relatively small direct economic and foreign trade relations between Hungary and the UK, the indirect effects of Brexit could still hinder Hungary’s economic growth. In the most extreme case, a recession is not impossible but even if that happens, Hungary will not become insolvent, he added.

Yields on Hungarian government securities are probably groing to increase in a turbulent market environment and the risk premium will also increase compared to German government securities, he said.

The forint traded at 321.64 to the euro around 7:30 in the morning on Friday, weakening sharply from 313.86 late Thursday after UK citizens voted to leave the European Union in a referendum.

The forint slipped to 292.65 from 276.41 against the dollar. It softened 301.05 to from 288.58 against the Swiss franc.

Reuters reported early Friday morning that according to nearly complete results 51.8pc of UK voters backed leaving the EU while 48.2pc voted to remain.