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S&P raises outlook on Hungary

Decision was based on a strong economy, sound policy and reduced debt.

Standard & Poor’s changed the outlook of Hungary’s BBB credit rating from “stable” to “positive” this past Friday. Hungary’s Ministry of Finance said that the country had surpassed expectations, achieving balanced and steady economic growth and an outstanding performance within the European Union. The treasury also noted that Fitch, another of the “Big 3” credit rating agencies, decided to confirm its rating of “stable” at this time. 

The Treasury added that the country’s balanced economic growth had been primarily due to the rise in real wages, the construction industry, and Hungary’s expanding car export capacities.

The improved outlook came also as a result of Hungary’s significant reduction in its debt ratio, its overall healthier debt structure and budgetary discipline. On top of these factors, S&P based its decision on Hungary’s strong external competitiveness, underpinned by a resilient export-driven economy and low indebtedness in the private sector.

S&P highlighted the 5 percent growth of the Hungarian economy for the last two years, noting it as one of the highest among EU Member States. This growth is expected to moderate to 3.5 percent in 2020, still an outstanding figure and due to Hungary’s continued strong domestic demand and supportive economic policies.

With this move, the ministry believes there is now a much greater chance of an upgrade by S&P of Hungary’s BBB credit rating in the next two years. The agency upgraded the rating for Hungary to BBB in February 2019.

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