Fitch still sees de-escalation of Hungary-EU tensions


Fitch Ratings on Thursday acknowledged that an election victory by Viktor Orbán's Fidesz-KDNP government on Sunday "extends tensions" with the European Union over rule of law issues, but said a de-escalation of those tensions remains its base-line assumption, according to a report by state news wire MTI.

Fitch said the European Commission's decision days earlier to trigger a conditionality mechanism that could result in the suspension of Hungary's EU funding over the rule of law disputes "could signal a hardening of both sides' stances", adding that the scenario creates risks to its view that Next Generation EU funding will be disbursed from the second half of 2022.

The agency said it continues to factor the receipt of the EUR 7.2bn of funding - equivalent to 5pc of 2021 GDP - into its growth forecasts, but added that failure to secure the funds could cut Hungary's mid-term growth prospects, by as much as 1.5 percentage points in 2023.

Fitch noted that it knocked down Hungary's GDP growth forecast for 2022 to 2.3% as high inflation impacts domestic demand and the war in Ukraine hits external demand.

The agency affirmed Hungary's BBB sovereign rating with a stable outlook at a scheduled review in January.


The New Age of Commerce is Approaching Analysis

The New Age of Commerce is Approaching

Horthy Statue to be Unveiled in Parliament Parliament

Horthy Statue to be Unveiled in Parliament

UPS Appoints Regional Director Appointments

UPS Appoints Regional Director

Completion of Metro Line M3 Renovation Delayed City

Completion of Metro Line M3 Renovation Delayed


Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.