Wow! Fitch Ratings has raised to Stable from Negative the outlook on its BBB rating for Hungary

HUNGARY - In Brief 07 Dec 2024 by Istvan Racz

---

This rating action was exactly the opposite of what Moody's implemented just one week ago. We are happy, of course, but also close to being entirely speechless. In hindsight, it is most likely that Fitch raised its outlook now because Hungary had been on negative outlook for almost two years, which is an unusually long period, and the agency just did not see enough reason to reduce its rating to BBB-. Anyway, Fitch's assessment appears to be correct on most issues, including their reference on the balanced BOP, the massive deceleration of inflation, the recent responsible conduct of monetary policy, the positive results of this year's fiscal adjustment, and even the prospect that GDP growth is likely to accelerate in 2025. On the other hand, their assessment is now quite optimistic about politics and their impact on economic policy, including fiscal matters and central banking. They do not appear to be concerned about Hungary's geopolitical risks, including the energy situation. And most strikingly, they do not seem to be concerned any more about the likelihood that concerns related to the domestic state of the rule of law will likely lead to continued limitation of Hungary's access to EU funds. As far as we remember, Fitch Ratings was harshly critical about this problem previously. This was the last review date for any of the Top-3 rating agencies regarding Hungary, as far as 2024 is concerned.