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S&P projects Hungary’s GDP growth at 2.5% for midterm

S&P projects Hungary’s GDP growth at 2.5% for midterm

BUDAPEST: The Standard and Poor’s (S&P) has raised its projection for Hungary’s mid-term GDP growth to 2.5% from 2%. The projection is the same as the government’s official 2.5% forecast for this year. In March Hungary’s junk credit rating also has been upgraded by Standard & Poor’s, which cited the country’s improving growth outlook and its better preparedness to handle unexpected crises.

Marcin Petrykowski, S&P’s managing director in charge of central and eastern Europe, has told business website portfolio.hu that the agency may upgrade Hungary if the government pursues policies that boost investment and economic growth. In March, it lifted Hungary’s rating by one notch to BB+, the country’s first upgrade since 2011, when it was placed into sub-investment grade. “If Hungary continues to implement growth and investor-friendly measures that could trigger a fresh upgrade, this is almost certain,” Portfolio quoted Petrykowski as saying.

In a report on the banking sector in central and eastern Europe published Tuesday, S&P put Hungary’s Banking Industry Country Risk Assessment (BICRA) score at 8, at the weak end of the scale of 1 to 10. Profitability of Hungary’s banking sector is still being squeezed by high credit losses and falling volumes, but the government’s recent promise to reduce the bank levy gradually and the successful conversion of FX mortgages into forints “could improve prospects for banks”, according to the report.