[ad_1]
Hungary’s recovery from the coronavirus epidemic is likely to be slower than expected, two central bank sources told Reuters, adding that the MNB’s stimulus measures are finite and already almost at the border.
Hopes that the recovery of the Hungarian economy after the economic crisis in the wake of the coronavirus epidemic will be V-shaped, meaningless, have been dashed. After second-quarter data shows that Hungarian GDP shrank by 13.6 percent, which is the worst figure in all of Eastern Europe, and twice as weak as the MNB report in June, Reuters, whose Two central bank sources also said that although another optimistic GDP forecast for a rapid recovery has been released, a review is already underway at the central bank.
Magyar Nemzeti Bank lowered the base rate by a total of 30 basis points to 0.6 percent in June and July.
The bank’s optimistic forecast and hopes for a speedy recovery were based on two key assumptions that public investment would ease the economic crisis and that a second wave of the pandemic could be prevented, according to Reuters sources, which now appear to be neither expected nor expected. at the central bank headed by György Matolcsy.
“We assumed that investment, especially public investment, would start, but the second quarter was really miserable,” said a source. “I have a feeling there could be a 5-7 percent drop this year, but a new forecast is still being made,” the statement added, adding that a pipeline-shaped recovery similar to the Nike logo could come on the farm instead of a V shape.
Reuters also reached out to Magyar Nemzeti Bank to comment on the leaked views, but the central bank’s press office declined to answer the relevant question, only the latest minutes of the Monetary Council were sent.
The second wave is here
The portal also mentions Prime Minister Viktor Orbán’s regular radio interview on Friday, in which he spoke about the need for Hungary to take more steps to start the economy. The government has already spent hundreds of billions of guilders this year on the labor protection and medical equipment program, and has identified other possible measures that could bring the budget deficit to 7-9 percent of GDP.
On Friday, Hungary registered 459 new cases of coronavirus and on Saturday another 510 people fell ill, which is the highest daily total since the outbreak of the pandemic. So the second wave is here.
Regarding the MNB, Reuters writes that it has launched a HUF 1 billion quantitative easing program and a HUF 450 billion corporate bond purchase program to help larger companies.
“As far as we know, approximately the [mozgásterünk] “The QE program is ongoing while there is still ample funding in the low-cost credit system.” According to the latest summary, companies have received HUF 467 billion in system funding. Many opted to refinance earlier and more expensive loans.
“The central bank has room to increase the size of credit programs, but what good is it if the current budget has not even been exhausted? Demand is growing very cautiously and banks are also more conservative,” the bank said. central in a statement to the news agency.
The central bank ruled out further cuts in the base rate, and one source said that any interest rate cut was already in the “absolute taboo” category. Thus, there is no room for maneuver, while high inflation, which remained at the peak of the central bank’s 2-4 percent target range in August, limits possible steps.
“Next year will continue to be difficult and we do not know what the second wave will bring, how long it will last,” said a source.
[ad_2]
