The paradox of acknowledging the performance of the Hungarian economy and still downgrading the country was also highlighted by analysts in London. They called the downgrade unexpected, adding that based on macroeconomic figures and compared to other countries, the decision is „difficult to justify”, and especially since there is “nothing new” in the agency’s reasoning.

Timothy Ash, head of emerging markets research at Standard Bank stated that even according to Standard&Poor’s forecast, Hungarian debt-to-GDP ratio is expected to drop to 73% by the end of 2012, while the European average is 86.8% and Hungarian budget deficit will be around 3% (an unprecedented figure in the history of Hungarian budgeting). The agency also forecasts real per capita GDP growth to be 0.8% for 2013 and 1.7% after that, which not too many crisis-ridden euro-zone countries may hope to achieve.

Timothy Ash highlighted that Portugal is also listed with a „BB” grade, even though the country’s deficit is 5% and its debt-to-GDP ratio is around 120%. Goldman and Sachs analysts underlined that the Hungarian currency was only 1.6% below its peak in August 2012, while the yield reduction of long-term government bonds appears to be steady and auctions are usually successful.

Consequently, despite recognizing the achievements of Hungary’s economic policy, Standard&Poor’s still aims to force the country it into a category in which no country with a budget deficit below 3%, a general government debt on a downward path and a steady current account surplus has ever been. It is thus high time for the lobbyist of speculators, Standard&Poor’s, to downgrade itself.

Source: Ministry for National Economy - kormany.hu