Fitch Ratings affirmed Hungary’s investment grade BBB sovereign rating but changed the outlook to negative from stable at a scheduled review on Friday. Fitch said higher global interest rates, volatile energy prices and weakening demand in Hungary’s key export markets is exposing vulnerabilities stemming from a policy mix that is “influenced by political considerations”.
Commenting on the review, the finance ministry said Fitch had changed the outlook to negative from stable due to the tougher international environment. In a statement, the ministry cited the agency as highlighting Hungary’s significant reduction of its public debt and budget deficit. Fitch also sees the economy avoiding a recession for the year as a whole, the ministry said. Fitch’s changing of Hungary’s outlook shows that the political disputes generated by the European Commission and the uncertainties caused by the war and the “sanctions-fuelled energy crisis” are also reflected in the reviews of rating agencies, the ministry said. It noted that Hungary has investment grade status from all three major credit rating agencies.