Hungarian economy facing ‘perfect storm’, says Oxford Economics

Nicolas Pongratz

Friday, November 25, 2022, 8:40 AM

Image from Shutterstock.com

A “perfect storm of shocks is hitting the Hungarian economy” and “the risks of a more severe scenario are growing,” Oxford Economics warned in a research paper, according to intellinews.com.

Hungary is experiencing the highest inflation in the EU outside the Baltic states, the worst currency depreciation in the bloc and the prospect of a recession next year.

The country’s position is weaker than that of its Central European neighbors due to its high fiscal and external deficits and higher foreign currency foreign indebtedness, all of which contribute to deteriorating sentiment towards the forint. which has lost 13% of its value so far. year.

“Hungary’s growing external imbalance – the current account deficit is large (currently above 6% of GDP) – makes the economy particularly vulnerable to this type of shock. And Hungary’s external debt denominated in US dollars and in euros is higher than among its peers, which means that the depreciation of the currency hits it disproportionately,” says Oxford Economics.

The research paper is available here.

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