Hungarian Economy Facing 'Perfect Storm,' Says Oxford Economics
Image by Shutterstock.com
A "perfect storm of shocks is hitting the Hungarian economy," and the "risks of a more severe scenario are rising," Oxford Economics has warned in a research paper, according to intellinews.com.
Hungary is experiencing the highest inflation in the EU outside the Baltic States, the worst depreciating currency in the bloc, and the prospect of recession next year.
The country's position is weaker than its Central European neighbors because of its high fiscal and external deficits and its bigger foreign currency external debt load, all of which contribute to the deteriorating sentiment towards the forint, which has lost 13% of its value so far this year.
"Hungary's swelling external imbalance – the current account deficit is wide (currently over 6% of GDP) – makes the economy especially vulnerable to this kind of shock. And Hungary's external debt denominated in U.S. dollars and euros is higher than in its peers, meaning that currency depreciation hits it disproportionately," Oxford Economics says.
The research paper is available here.
SUPPORT THE BUDAPEST BUSINESS JOURNAL
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.