S&P likely to keep Hungary’s rating unchanged

Today, Hungary’s rating would be reviewed by rating agency S&P after market hours. It is not expected to change the rating or outlook, said Commerzbank in a research report. Standard & Poor’s was earlier anticipated to raise its outlook for Hungary from stable to positive during its view in March. However, it kept everything unchanged after seeing that policy transparency had freshly declined, noted Commerzbank.

The view has barely been changed since then. Developments are unlikely to take place in Hungarian policy in the same manner; however, the economic growth outlook has deteriorated noticeably in recent quarters. The severe drop in fixed investment in 2016 is unlikely to be missed by the ranting agency’s scrutiny, added Commerzbank.

Even if there is official guidance that this drop has been driven by an expected pause in EU funding, and that things would turn around by the end of 2016, the growth forecasts have been downwardly revised, said Commerzbank. Also S&P is unlikely to wait and first see signs of a turnaround.

Anyway, the rating agency expects Hungary’s potential growth rate to remain very low. Therefore, the current mix of factors does not argue for an enhanced assessment, according to Commerzbank.