Coface expects austerity measures to boost credit risk in Hungary

Analysis

The Hungarian unit of French credit insurance company Coface expects credit risk in Hungary to increase in 2007 as a result of the government's austerity measures. The measures will increase Hungary's already high rate of insolvency, Coface said.

Coface expects the construction sector to contract in 2007, which will not help its insolvency rate of 4.17%, Hungary's highest. Coface also expects the insolvency rate in the retail trade sector to increase from the current 2.59% because of a fall in household income. In addition to slowing GDP growth, Hungarian companies will also face a drop in public sector orders. The depression could last for two or three years, Coface said.
In its global outlook, Coface expects oil prices to stabilize and feedstock prices to increase at a slower rate in 2007.

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