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ING economists Peter Virovacz and Frantisek Taborsky say Hungary’s new Tisza-led supermajority reduces short-term policy uncertainty and raises expectations for institutional repair, EU relations and fiscal credibility. They highlight likely delays in EU funds, a near-term deterioration in fiscal metrics, and the potential confidence boost from setting a Euro adoption target as the new government reshapes economic policy.

New mandate, fiscal rebuild, euro option

“From a macro perspective, the key takeaway is the unexpected strength of the mandate for regime change, which reduces short-term policy uncertainty while raising expectations of institutional repair, EU relations and fiscal credibility more quickly than expected.”

“While there is widespread expectation that the Magyar government will quickly resolve the EU-fund-related issues, the reality is that it may take longer.”

“The Hungarian budget is also facing pressure to be restructured, given that the macro backdrop on which it was based has changed significantly.”

“Speaking of fiscal, this year will probably be about dismantling the inherited budgetary and economic policy structure, which could lead to even worse fiscal metrics in the short term.”

“Last but not least, the government could set a target date for euro adoption, establishing a path to reach it, which can be shaped later.”

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Source: https://www.fxstreet.com/news/hungary-policy-reset-and-euro-path-ing-202604131402

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