Weak forint: euroisation to come in Hungary

Hungary’s economy will be in recession, and there is a risk that the inflation rate will remain permanently high – experts at the Budapest Economic Forum said today. 

Portfolio.hu’s leading analyst István Madár was the moderator of a discussion concerning Hungary’s economic and financial prospects between Péter Ákos Bod and Viktor Zsiday at the event. Zsiday said that the government needed to stabilise the exchange rate of the forint, while Bod highlighted the importance of keeping the investors’ trust. Gainging it back will be much more difficult, he added. Zsiday and Bod agreed there was a chance that inflation would remain high in Hungary, portfolio.hu wrote.

“We should have our national currency if we can use it responsibly.” However, what happened in the last ten years, especially in the previous 18 months shows we should not stick to the forint. “We would rather join the eurozone”, Zsiday added. He also pointed out that due to the quick weakening of the forint, a spontaneous euroisation will soon start in Hungary.

Bod said that the weak national currency did not help the Hungarian economy. There will be no more Audi motors manufactured in Győr because of that. Only tourists will come in higher numbers to take advantage of Hungary’s relatively cheap restaurant and bar prices.

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Bod said it was bad news that companies requiring tremendous energy come to Hungary. That is because they increase Hungary’s energy dependency. Those factories operate with Russian gas and contribute a lot to destroying Hungary’s current account deficit.

They agreed Hungary badly needed the euro billions the European Commission refused to pay because of corruption allegations against the Hungarian EU funding system.