“In particular, the ongoing adjustment of the highly negative net international position, the high level of public and private debt in the context of a fragile financial sector and deteriorating export performance continue to deserve very close attention,” it added. Hungary’s net international investment position has been improving, but mainly because of private sector deleveraging.

Export performance has been “lacklustre” and encouraging signs in manufacturing would not be enough by itself to produce a turnaround. The commission acknowledged a decline in the debt level, but said risks related to private debt remain.

Deleveraging has been hindered by a high share of distressed borrowers, a depressed home market, a fragile financial sector, the big share of foreign currency-denominated loans and prevailing business uncertainty, it said. It said Hungary’s structural balance is projected to deteriorate in 2014.

Source www.hungarymatters.hu

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