Timothy Ash of Standard Bank said Prime Minister Orbán “much needed investment” and “real GDP growth to the next level” would be helped by fewer unpredictable changes of policy, particularly in terms of taxes.

William Jackson of Capital Economics said that in the very near term, Orbán’s new premiership is likely to come along with a strengthening economic recovery.

“But the bigger picture is that there are unlikely to be any reforms to address the structural problems that emerged during Orbán’s previous term ...As such, over a medium-term horizon, we think the Hungarian economy is likely to remain a regional laggard.”

London-based economists at JP Morgan said a key challenge would be to boost Hungary’s investment rate and narrow the real GDP gap versus its regional peers. On both counts Hungary has trailed neighbouring countries in recent years.

The level of Hungary’s real GDP is just 2 percent higher than at the start of 2010, versus gains of 8-10 percent in Poland and Romania over the same period, they added.

“We believe that banks will again be expected to shoulder a good deal of the losses from any program that seeks to completely eliminate household exchange risks and ultimately phase out FX loans ...

However, a meaningful turnaround in the government’s attitude towards the banking sector is unlikely until banks increase lending to the private sector, but banks, in turn, will be reluctant to lend fearing renewed FX loan losses.”

Source www.hungarymatters.hu

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