Market Report, "Hungary Country Risk Report Q2 2015", published

Core Views

* Having been propped up by fiscal stimulus in 2013 and 2014, real GDP growth in Hungary will slow substantially in the coming quarters as government spending is scaled back. Hungary's domestic demand recovery will trail that of Central European peers due in part to a crippled banking sector, while external demand will remain weak on the back of a stalled eurozone recovery.
* We believe that the threat of EU structural funding cuts - which Hungary has become increasingly dependent on - will be sufficient motivation for the government to do just enough to keep the country's deficit within EU limits in the coming years. However, public debt will remain well above Emerging European averages and Hungary will remain in a precarious fiscal position with minimal resilience to shocks.
* Hungary's current account surplus will remain sizeable in the coming years, bolstered by falling oil prices. However, we forecast a long-term narrowing of the surplus on the back of weak external demand and a gradual but sustained loss of competitiveness.
* Strong deflationary forces and additional monetary easing from emerging and developed peers will compel the Hungarian National Bank to resume a rate cutting cycle in 2015. The bank's pro-growth stance and policy coordination with the government pose minimal risks in the short term as global monetary conditions remain loose, but will damage its credibility over the long-term, undermining its ability to achieve price and financial stability.
* Alleged infringements of civil liberties in Hungary will leave the government ostracised from decision making at an EU level. This isolation will pose little threat to government stability, given the strong popular support the government enjoys, but it does pose a threat to Hungary's influence on regional policy.

Full Report Details at
- http://www.fastmr.com/prod/951894_hungary_country_risk_report_q2_2015.aspx?afid=301

Major Forecast Changes

* No major forecast changes

Key Risks To Outlook

* Risks to our real GDP forecasts are weighted to the downside, and stem from ongoing weakness in...

The Hungary Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Hungary. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Hungary's economic, political and financial prospects through end-2019, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

* Forecast the pace and stability of Hungary's economic and industry growth through end-2019.
* Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
* Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.

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