The global credit rating agency S&P Global Ratings maintained Hungary’s sovereign credit rating at BBB. That puts Hungary in the ‘recommended investment’ category, although in its lowest rating.

In its report, the agency wrote that it projects the country’s GDP to expand by 2.6 per cent in 2024. This is good news after the Hungarian GDP contracted 0.4 per cent in Q3 of 2023, and held steady at 0.0 per cent growth in Q4 2023. Overall, Hungary’s GDP shrank by 0.5 per cent in 2023. However, according to S&P,

‘Hungary’s fiscal slippage this year will be temporary and public finances will improve from 2025 without threatening economic stability’.

The National Bank of Hungary has been steadily cutting interest rates since October 2023. At their most recent meeting earlier this month, they lowered their benchmark rate to 7.75 per cent. Before October 2023, it was as high as 13 per cent. These cuts were made possible by slowing inflation, which S&P also notes. Lower interest rates incentivise investment into businesses, as low-risk government bills and bonds do not yield as high return; and make it cheaper to take out business loans and mortgages as well, since banks do not get paid as high interest on their excess reserves.

S&P also project an average GDP growth rate of 2.8 per cent for 2025–2026. In their report, they write:

‘The stable outlook reflects our view that Hungary’s small, open economy will recover from 2024 after this year’s rebalancing, which occurred after a series of external shocks and a period of fiscal stimulus in 2022. We expect this will enable fiscal and monetary policy authorities to restore some policy space…With reasonably high nominal GDP growth in the next few years, we expect net general government debt to broadly stabilize at around 72 per cent of GDP until 2026′.

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