Hungary to face severe economic recession because of the coronavirus

Based on the latest analysis of the Morgan Stanley, the recession might reach 8.5 pc in the Q3, and it will not be much better even in the Q4, as well.

A few weeks ago just mentioning that there will be recession was surprising, today it is self-understandable among economists – portfolio.hu reported. According to Morgan Stanley, in Q3 and Q4 the recession might exceed 8 pc, but it is good news that in 2021, the growth will be significant again. Fiscal answers are not yet known, but it seems that the Polish and the Czech governments have bigger plans than the Hungarian.

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Based on the calculations of the American financial services company, the economic depression will affect Hungary more than Poland and the Czech Republic. In Q3 and Q4 the recession can be -8.5 pc and -6.9 pc, so the MS’s prognosis is much worse than the Hungarian government’s. They also added, however, that in 2021 the increase can reach a double-digit in Hungary.

All three countries already

announced financial aid packages because of the epidemic.

The Polish and the Czech can be regarded as grandiose, the Hungarian is yet smaller, but in the case of Budapest, experts expect further measures. Furthermore, the national banks in Poland and the Czech Republic already cut interest rates while the Hungarian National Bank’s Monetary Council is going to meet on Tuesday.

JP Morgan analysed the three countries’ rescue packages, and they said that Polish is 3 pc of the country’s GDP while the Czech is 1.7 pc of their GDP. In contrast, the Hungarian is only 0.1 pc of the country’s GDP. However, they stated that they expect a big announcement from the government in the near future. The company expects

a -3.5 pc budget deficit in Hungary.

The Polish government announced a package worth 9 pc of the Polish GDP containing tax reductions, debt guarantees, social expenditures and measures encouraging investments. This year’s budget deficit is going to be around 4.5 pc, according to JP Morgan. However, that can rise above 5 pc easily, and in 2021, it can remain approximately 3.2 pc.

Prague announced a package worth 36 billion EUR which is 18 pc of the GDP. We know much less about the program than in the case of Poland, but it seems that it will concentrate on helping companies and the SME sector. The coronavirus will cause 1.8 pc deficit in the country’s budget, based on the calculations of JP Morgan.

Source: portfolio.hu