February 14, 2020 / 10:11 PM / 5 days ago

S&P upgrades outlook on Hungary to positive from stable on growth prospects

FILE PHOTO - A worker is seen at the construction site of a building in Budapest, Hungary, May 16, 2018. REUTERS/Bernadett Szabo

(Reuters) - S&P Global Ratings on Friday revised its outlook on Hungary to positive from stable on strong economic growth prospects and as macroeconomic imbalances remain contained.

S&P expects Hungary’s economy to grow by about 3.5% in 2020 — in line with the country’s recent forecast — on the back of strong domestic demand and accommodating monetary policies, and if there’s no external shock.

Hungary cut its 2020 economic growth forecast to 3.5% from 4%, the slowest growth in four years, as coronavirus, Brexit and high levels of global debt have damaged its growth prospects, the finance minister said on Friday.

S&P also affirmed ‘BBB/A-2’ long- and short-term foreign and local currency sovereign credit ratings on Hungary.

Separately, ratings agency Fitch on Friday affirmed Hungary’s long-term foreign-currency issuer default rating at ‘BBB’, with a stable outlook.

Fitch also said it expected monetary policy to remain accommodative, despite the temporary spike in inflation and weakness in the currency.

Hungary’s central bank on Thursday pledged to deploy full monetary arsenal to rein-in inflation, giving the ailing forint some respite after January price growth came in well above expectations.

Reporting by Rama Venkat in Bengaluru; Editing by Vinay Dwivedi

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