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Varga: Ukraine crisis effect on Hungary economy limited

Analysis

The crisis in Ukraine has so far had only limited impact on Hungary’s economy, but the government is watching developments closely, National Economy Minister Mihály Varga said on the public television news program “A Lényeg” late Sunday. Varga described Ukraine as an important business partner, though Hungary has closer relations with EU member states. 

At present, the government will continue to keep tabs on development in Ukraine, where Hungary’s OTP Bank and Eximbank are present, Varga informed, adding that Hungary also has important ties with Ukraine in the food and pharmaceutical industries.

“Should there be any developments that require the government to take steps, the government will certainly take those steps,” he added.

Commenting of the forint’s exchange rate, Varga said a good rate is one that ensures stable economic growth and which allows economic players to lay down business plans. He reiterated that the government has no exchange rate target as the forint’s rate has a neutral effect on the budget over the course of a year. What is important is that the rate be less volatile, he added.

“Exchange rate fluctuations cannot shake a stable economy and I believe Hungary is in such a situation,” Varga opined. Factors such as a lower budget deficit, a higher rate of employment and a substantial export trade surplus achieved over the past years have helped Hungary’s economy to become more resistant to such fluctuations, he explained.

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