Standard & Poor’s upgrades Hungary

A conservative analyst interprets the second major rating company’s decision to upgrade Hungary to investment category as an acknowledgement of the success of the oft criticized economic policies pursued by the government and the National Bank.

On Friday, Standard & Poor’s upgraded Hungary to investment category. In a press release, S&P explained the decision with reference to Hungary’s steady growth rate and low deficit. The rating company estimated that the deficit will be 1.8 per cent this year, and it also raised its earlier growth estimate to an annual average of 2.5 per cent for 2016-2019. As Fitch already moved Hungary out of junk status in May, two of the three main rating companies now recommend Hungarian bonds to investors.

Standard & Poor’s has finally acknowledged the success of the Hungarian government’s unorthodox fiscal and monetary policies, Zoltán Dénes comments in Magyar Idők. The pro-government analyst writes that those rating companies that downgraded Hungary to junk status as a result of the government’s economic reforms now realize that those often criticized policies do work after all. The Hungarian government has cut taxes, converted FX loans into Forint debt and boosted economic output, while at the same time cutting back the deficit to below 2 per cent, Dénes notes.

Tags: credit-rating, deficit, economy, GDP