Hungarian Sovereign Rating by S&P Global Ratings

The international credit rating agency S&P Global Ratings has affirmed its investment-grade rating of 'BBB minus/A-3' on Hungarian government debt obligations in foreign and local currency with long and short maturities.

Two weeks ago, Fitch Ratings also affirmed Hungary's sovereign rating at 'BBB', also with a stable outlook.

S&P explained its affirmation decision by stressing its view that the small, open Hungarian economy is now stabilising after a series of external shocks.

Although monetary and fiscal policy has tightened since last year's elections and is expected to weigh on consumption for the rest of this year, the rating agency believes the Hungarian economy's growth prospects beyond 2023 are healthy.

S&P said that since the downgrade of Hungary's sovereign rating by one notch within the investment-grade category earlier this year, immediate macroeconomic stresses have largely abated as a result of tight fiscal and monetary policy.

The firm expects net export growth, driven primarily by FDI, to prevent a decline in the Hungarian economy's performance already this year.

According to S&P Global Ratings' forecast, Hungarian agricultural output growth could potentially exceed 20 percent, and the firm calculates that this alone could contribute almost one percentage point to real GDP growth.

Exports are expected to grow by 4% in real terms this year, and the current account deficit as a share of GDP is expected to fall below 4% - less than half of last year's deficit - the rating agency expects.