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S&P had revised the outlook on the ʼBBBʼ rating to positive in February, but changed it back to stable late in April because of pandemic-related risks.

According to Fitch, Hungaryʼs ʼBBBʼ rating balances strong structural indicators, a stable banking system, and a stronger track record of growth relative to peers against high general government debt and risks from a track record of unorthodox macroeconomic policy.

“In the absence of further significant COVID-19-related shocks, Hungaryʼs economy will rebound and reach pre-pandemic real GDP levels by early 2022, sooner than most other Central and Eastern European (CEE) economies,” S&P said.

While the economic impact of the coronavirus crisis will sharply worsen fiscal metrics, Fitch expects an improvement beyond 2020, given expectations of a return to growth and fiscal consolidation post pandemic.

S&P projected Hungaryʼs economy would contract by 5.1% in 2020, adding that it believes the drop in Q2 will be the low point, if there is no second wave of coronavirus infections.

Fitch said the impact of the pandemic is set to cause Hungaryʼs economy to contract by 5.9% in 2020, but added that it expects GDP growth to recover to 5.4% in 2021 and 4.3% in 2022.