Hungary’s economy: looking good? | beyondbrics

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Visitors to downtown Budapest – teeming with tourists in these summer months – may be surprised by the number of forlorn shops, their fronts closed and shuttered, awaiting new tenants. Yet despite such evidence of a prolonged retail downturn, the Hungarian economy can still show the world a thing or two says Viktor Orban, the country’s pugnacious prime minister: not least that it has brought its budget deficit down below 3 per cent of GDP, and cut inflation to record lows.

Whether these achievements are sustainable is another matter. But government officials repeat the positive elements of the story, and the markets seem to believe it.

“The resilience of Hungarian assets to the recent sell-off in emerging markets has been quite remarkable,” says Nicholas Spiro, managing director of London-based Spiro Sovereign Strategy. “Hungarian 10-year bond yields have backed up a tad less than their Polish equivalents since early May, while the forint’s losses since then have been recouped – and even these were negligible relative to EM currencies like the Turkish lira and the rand.”"

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