Rating agencies have now joined market players, the European Commission and other international organisations in confirming that the Hungarian economy is on the right track, Economy Minister Mihály Varga said on Saturday morning, commenting on an announcement by Fitch Ratings on the previous day.
Fitch Ratings revised the outlook on Hungary’s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDR) to ‘positive’ from ‘stable’ and affirmed the IDRs at ‘BBB-‘ in a scheduled review.
Varga attributed the agency’s decision to Hungary’s stable economic growth, a steady decline in the state debt, growing employment and the annual budget deficit standing at around 2 percent.
Among the key rating drivers to which Fitch assigned a “high” weight were the “marked improvement” in Hungary’s net external debt position, to an estimated 9 percent of GDP in 2017 from 53 percent in 2014; and the country’s current-account surplus, which averaged 3.7 percent of GDP in 2014-2016.
Fitch assigned a “medium” weight to a steady decline in Hungary’s state debt relative to GDP and a reduction in non-residents’ holdings of that debt; an acceleration in GDP growth, to an expected 3.7 percent in 2017 and 3.5 percent in 2018, up from 2.2 percent in 2016, driven mainly by domestic demand but also by recovering investment; and improved banking sector liquidity, profitability and asset quality.