Russian-Ukrainian conflict hits Hungarian economy – Xinhua
Gas prices are seen at a gas station in Budapest, Hungary, March 4, 2022. The military conflict between Russia and Ukraine has already had a negative impact on Hungary’s economy. (Photo by Attila Volgyi/Xinhua)
by Geza Molnar
BUDAPEST, March 5 (Xinhua) — The military conflict between Russia and Ukraine has already had a negative impact on the Hungarian economy, as indicated by falling prices on the Budapest Stock Exchange, a national currency reaching record levels and the liquidation of a local trading company. Bank.
“To provide a continuous supply of fuel to everyone, we are maximizing the amount of refueling allowed in a single purchase in 100 liters,” Hungary’s largest oil and gas company MOL told its customers in recent days.
The limitation is imposed because of a price cap of 480 Hungarian forints (US$1.38) that the Hungarian government put on retail fuel prices on November 15, to mitigate the effects of inflation higher.
The government introduced the price cap for an initial period of three months, but the measure was extended until May 15.
“Prices without the cap would be 501.8 forints for a liter of gasoline and 521 forints for a liter of diesel from Friday,” the MOL said in a statement on Friday.
Hungary’s inflation rate was 7.9% in January, driven by the restart of production after the COVID-19 pandemic, and microchip production shortages and disruptions in global supply chains , as countries around the world have adopted different anti-epidemic measures and reopened their economies at different times and levels, Janos Nagy, senior analyst at Erste Bank, told Xinhua.
With the Russian-Ukrainian conflict, “the financial markets are panicking and in general abandoning their emerging market portfolios, including their currencies”, Nagy said, adding that the inflation rate with the effect of the conflict is expected to climb up. 9% this year. year.
On Friday, the Hungarian forint hit new record lows at 381.71 against the euro and 346.54 against the dollar, Hungarian central bank MNB said.
“We’re looking at an economy that’s going to run out of Ukrainian wheat, nitrogen, and the price of natural gas is also going to go up, which will have an effect on fertilizers and ultimately food products,” Nagy said.
German carmaker Audi’s plant in the western Hungarian town of Gyor said a major Ukrainian supplier was in trouble and its production would therefore be affected.
In addition to inflation and exchange rates, foreign trade is also subject to scrutiny by experts. “The interesting point in foreign trade is also the issue of gas and oil, because Hungarian energy consumption is at least 40% dependent on Russia,” Nagy noted.
According to the senior analyst, Hungary’s largest commercial bank OTP, which has branches in Russia and Ukraine, will be a short-term loser from the Russian-Ukrainian conflict, as investors usually shy away from such stocks during times of conflict.
The bank’s shares which traded at over 18,000 forints on Feb. 9 plunged to 9,600 on Wednesday. They rebounded on Friday morning as the head of the Prosecutor’s Office, Sandor Csanyi, said the bank would retain its Russian and Ukrainian branches.
“The question of trust is sometimes more important than fundamentals with financial institutions. This caused the liquidation of Sberbank, which had no fundamental problems, but suffered a backlash in chain of panicked clients withdrawing all their assets at once because of the Russian parent institution,” Nagy noted.
Due to the significant liquidity and capital situation of Sberbank Hungary, the MNB on Wednesday revoked the Hungarian credit institution’s business license and ordered its liquidation.
According to Nagy, as a rare positive effect, these people arriving from Ukraine could help alleviate labor shortages in the country. ■
Photo taken on March 4, 2022 shows a gas station of Hungarian oil and gas company MOL in Budapest, Hungary. The military conflict between Russia and Ukraine has already had a negative impact on the Hungarian economy. (Photo by Attila Volgyi/Xinhua)