Standard and Poor’s (S&P) latest Global Ratings assessment affirmed Hungaryʼs “BBB” sovereign rating, but adjusted the country’s sovereign credit rating outlook from positive to stable, due to the affects of the CoronaVirus pandemic. This stable outlook assessment reflects S&Ps perception that the macroeconomic risks due to the COVID-19 pandemic, will be alleviated by Hungaryʼs robust policy response and projected economic recovery in Hungaryʼs key trading partners in 2021. S&P also indicated that the confirmed outlook reflected their forecast that the country’s fiscal deficits will remain contained.
According to S&P, Hungaryʼs economy is projected to contract 4% in 2020; but acknowledged the fiscal adjustments and counter measures that the Hungarian government and the central bank put in place, to cushion the effect of the pandemic on the economy. Likewise the agency noted significant improvements in the governmentʼs debt profile due to policy adjustments that decreased the rate of Foreign Exchange debt, and that the ratings agency regarded the Hungarian banking system to be “well-capitalized, profitable, and liquid”.
Standard & Poor’s overarching conclusion is that it expects the Hungarian economy to withstand the negative impact of the CoronaVirus pandemic, and anticipates that the economy will rebound next year in 2021, with a positive forecasted growth rate of 4.8%; due to the decisive actions of the Hungarian Government including strong macroeconomic fundamentals and economic stimulus measures.