“Hungary’s credit profile is supported by a diversified economy that is closely integrated into European supply chains, fiscal policies that have kept the budget deficit below the Maastricht threshold in recent years and its commitment to gradual fiscal consolidation and debt reduction,” Moody’s said.

Moody’s projects Hungary’s economy will contract by 4.8% in 2020 because of the coronavirus crisis, but it sees a recovery starting already in the second half of the year and puts 2021 GDP growth at 4.0%.

The author of the report, Moody’s VP and Senior Credit Officer Steffen Dyck, said the crisis would cause Hungary’s state debt relative to GDP to climb to 73.6% in 2020 from 66.3% at the end of 2019, but added that a “significant and sustainable” reduction in Hungary’s external vulnerabilities has made the country better able to withstand external shocks.