The appreciation of the Swiss franc since 2008 has had the equivalent impact on Hungarian FX borrowers of a 600bp interest rate increase, London-based emerging markets analysts said on Monday.
In its fortnightly CEEMEA Macro Monitor report released to investors in London, Morgan Stanley said "it looks pretty clear" that this is one of the reasons why retail spending has been held back so much in Hungary since 2008.
"This is even more striking in light of the fact that Hungarian households had not gone on a spending binge during 2005-2008 like their Baltic or Balkan counterparts had done, so there were no 'consumption excesses' to undo".
The report, titled "CEE: On a Swiss Knife-Edge", says that repayments on CHF loans in Hungary are up about 50%, while in Poland they are up some 25%.
"We think the Hungarian plan to cap FX mortgage payments represents a helpful short-term fix, but will have no noticeable impact on growth ... we therefore continue to see Hungarian growth risks as tilted to the downside", Morgan Stanley's London-based emerging markets economists said.