Some stabilisation in Hungary after a deep recession

The economy may well bottom out in the first quarter or half year of 2010, and experts predict a slow recovery in the second half of the year.
Madrid - 12-mai-2010

After years of private and public sector overspending, resulting in strong GDP growth, but also in high twin deficits, the economy has fallen into deep recession. The sharp drop of the forint at the end of 2008 increased commercial credit risks, as the debt service burden for heavily euro-indebted household/corporate/public debtors rose steeply. A massive standby package of US-$ 25.8 billion, from the EU and the IMF, was introduced to shore up the forint and the strongly eroded international reserves. In the second half of 2009 the forint exchange rate recovered, and the government supported a shift to forint-denominated loans, but the foreign currency loan stock still represents a significant risk.

In 2009, GDP contracted 6.3% as domestic demand-oriented sectors were hit by budgetary tightening and industrial exports suffered as a result of the economic meltdown in the eurozone. However, IMF-monitored fiscal consolidation led to a reduction in the budget deficit from a record 9.4% of GDP in 2006 to 3.9% of GDP in 2009, as the government introduced further austerity measures, curbing public sector spending even more and raising taxes - especially VAT.

The construction sector is still under considerable strain, with a fifth consecutive year of contraction expected, due to falling demand coupled with tightened conditions for project financing. The steel and automotive sectors have fallen victim to the worldwide decline in demand, and consumer electronics has been severely hit by the reduction in consumer spending. All these industries are still considered to be high risk sectors in Hungary.

In 2009, Hungarian companies suffered from banks reluctance to provide credit. Generally, banks were very cautious in their lending: withdrawing cover, increasing prices, and imposing stricter conditions. Besides the economic crisis, the main reasons for this were historically low savings and increasing financing costs. The construction sector and SMEs have been particularly affected by loan restrictions, although, in the last six months, Crédito y Caución has seen that, with growing economic stabilisation, banks have increased their lending and eased conditions.

Recovery expected in the second half of 2010

Payment delays are prevalent in all sectors, with even public buyers such as municipalities and ministries paying late. Generally, the number of non-payments increased in 2009 because of the crisis - and the overall trend is still negative. However, a slow improvement is likely in the second half of the year.

Corporate insolvencies increased 30% year-on-year in 2009 - to more than 14,000. This trend has continued into 2010, with more than 4,000 registered in the first quarter. Crédito y Caución expects a further increase this year, with construction, food, consumer durables, IT, and retail sales mainly affected.

The economy may well bottom out in the first quarter or half year of 2010, and experts predict a slow recovery in the second half of the year. For the whole of 2010, GDP is expected to contract between 0.5% and 1%. Tight fiscal discipline is necessary to keep the budget deficits under control, and austerity measures will continue to curb domestic demand.

Mantenha-se informado. Receba a nossa Newsletter

Esta pagina web usa cookies

Utilizamos cookies de terceiros para fins analíticos (produzindo estatísticas baseadas nos seus hábitos de navegação), personalização (para lembrar o idioma ou as configurações preferidas da web) e publicidade comportamental (para desenvolver perfis e oferecer publicidade adaptada às suas preferências de navegação). Poderá configurar o uso desta tecnologia. Poderá também modificar ou retirar o seu consentimento a qualquer momento, clicando em "Declaração de Cookies".

Marketing

Os cookies de marketing são utilizados para rastrear os visitantes dos sites. A intenção é exibir anúncios que sejam relevantes e atraentes para o utilizador individual e, por conseguinte, mais valiosos para os editores e anunciantes terceiros.

Necessárias

Os cookies necessários ajudam a tornar um site utilizável, ativando funções básicas como navegação na página e acesso a áreas seguras do site. O website não pode funcionar corretamente sem estes cookies.

Estadísticas

Os cookies estatísticos ajudam os proprietários dos sítios Web a compreender como os visitantes interagem com o sítio Web, recolhendo e fornecendo informações de forma anónima.

Preferências

Os cookies de preferências permitem que o site se lembre de informações que alteram a forma como o site se comporta ou é apresentado, tais como o seu idioma preferido ou a região em que se encontra.

Cookies de mapa

Os cookies de mapa permitem que a página salve informações sobre seleções no mapa