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Hungary can have euro “a year ahead of peers”

Hungary could enter the eurozone a year ahead of Poland and the Czech Republic, a major City-based investment bank said.

JP Morgan said in an economic research note released in London that the recession in Central Europe, the consequent deterioration of public finances, and downward pressures on local currencies “have further reduced the CE-3's chances of adopting the single European currency in the coming few years.”

However, the expected sound global cyclical recovery will provide a window of opportunity to Central European countries to adopt the euro in 2014-16.

“We estimate that CE-3 fiscal gaps, on average, will decline to the 3% of GDP limit in 2013-14 ... (but) given its restrictive fiscal stance in recent years, Hungary could reach the 3% limit in 2012.”

JP Morgan said that within the CE-3, political and economic incentives to adopt the euro appear to be the highest in Hungary and the lowest in the Czech Republic. (MTI – Econews)