Budapest, September 17 (MTI) – The decision by rating agency Standard and Poor’s to raise Hungary’s sovereign rating from junk to investment grade is an acknowledgement of the good progress the country is making, the economy minister said on Saturday.
On Friday, the agency raised Hungary to BBB-/A-3 from BB+/B while maintaining its stable outlook.
Speaking at an event for economists in Kecskemét, in western Hungary, Mihály Varga said S+P analysts had noticed the successful reform of Hungary’s economy and that growth has stabilised. Meanwhile, the public debt has declined and the internal structure of the debt improved, he added.
The upgrade will bring about a decline in yields in the near future and Hungary’s vulnerability will continue to decline, though the public debt level is still high compared with the rest of the region, he said.
He said, however, that productivity and efficiency in the economy needed improvement in the future. Hungary is the weakest among the Visegrad Group of countries when it comes to productivity, he noted. Varga also referred to “new challenges” on the labour market, saying that whereas the jobless rate was now well below the European Union average, employers were now complaining of labour supply problems.
Among the ten professional areas where demand for labour is highest, both the very highly qualified and the low-skilled are need, he said. Of the 100,000 unfilled jobs in the country, half are in the private sector, Varga noted, adding that labour shortages are geographically spread “very unequally”.
The minister said wage pressure would make life difficult for domestic businesses. “We are further ahead in making productivity gains than in wages,” he said.
Varga said addressing low productivity, ironing out regional discrepancies on the labour market and sorting out the skills shortage will be the main focuses of policymaking moving forward.