Latest news with #GergelySzakacs
Yahoo
04-05-2025
- Business
- Yahoo
Hungary's election-year 2026 budget hinges on risky growth projection, fiscal watchdog says
By Gergely Szakacs BUDAPEST (Reuters) - The Hungarian government's budget plans for the 2026 election year could be at risk if its economic growth assumptions prove too optimistic, the head of budget watchdog Fiscal Council told Reuters. Prime Minister Viktor Orban's government forecasts 4.1% economic growth next year, well above the 3.2% economists' consensus in a Reuters poll and 2.6% forecast by the International Monetary Fund. S&P Global, which cut Hungary's credit rating outlook to negative from stable last month citing fiscal stability concerns, projects next year's growth at 2.5%. "The most important downside risk to the budget is if the projected growth trajectory proves to be too optimistic for 2026 as well," Fiscal Council Chairman Gabor Horvath said in remarks cleared for publication on Sunday. "There are significant uncertainties around this year's GDP growth, and definitely the uncertainties are not smaller regarding 2026 growth." Orban has banked on economic recovery to help him secure another term in next year's elections when he is expected to face the sternest opposition challenge in well over a decade. An upturn, initially expected already last year, so far has failed to materialize, forcing the government to cut spending and hike taxes and to cut its 2025 growth forecast. Hungary's economy was mired in stagflation in the first quarter, with output unchanged from a year ago and inflation running at the European Union's highest levels. Responding to the weaker-than-expected first-quarter data, the Economy Ministry told Reuters it planned to submit the budget to parliament with its original economic assumptions, with a next review of its forecasts due in June. The government aims to reduce next year's budget deficit to 3.7% of gross domestic product from a recently-increased 4% target in 2025, and a higher-than-expected 4.9% shortfall in 2024. Economists polled by Reuters, however, see next year's deficit at 4.2%. Given the scale of uncertainties in the world economy, the early adoption of the 2026 budget did not help, Horvath said. The level of reserves, just like in the 2025 budget, remained too low to tackle contingencies. "The level of the reserves is very low again, which, compared to the very high uncertainties, might be insufficient," he said. Moody's Analytics has warned that tariffs would hurt export-reliant central European economies, with the Czech Republic, Romania and Hungary among those hardest hit. Hungary's central bank has also flagged those as a risk. Horvath also said it was risky for the government to assume that its steep tax cuts for families can be financed by stronger growth, while special business taxes remain in place.
Yahoo
01-04-2025
- Politics
- Yahoo
Hungarians keep up protests against Orban's move to ban Pride
By Krisztina Fenyo and Gergely Szakacs BUDAPEST (Reuters) - Thousands of Hungarians protested in Budapest on Tuesday against a law that aims to ban the annual Pride march by LGBTQ+ groups, and which is seen by critics as part of a wider crackdown on democratic freedoms ahead of a 2026 parliamentary election. Right-wing Prime Minister Viktor Orban, who faces a strong challenge from a surging opposition party ahead of the vote, has criticised the LGBTQ+ community and pledged to curb foreign funding of independent media and non-governmental organisations in Hungary. Parliament, dominated by Orban's Fidesz party, passed a law last month to ban the Pride march on the grounds that it could be harmful to children. Orban, who has been in power since 2010, promotes a Christian-conservative agenda. The law says police can use facial recognition cameras to identify people who attend the event, and impose fines on participants, which critics say could become a tool to target Orban's political opponents. Orban has said the fact that rallies such as the one on Tuesday could take place meant there was no threat to democracy, calling opposition protests against the new law "provocation." However, some demonstrators attending the protest, the third rally over Orban's reforms, voiced concerns about the health of Hungary's democracy more than two decades after it joined the European Union. A group of embassies in Budapest, including European states but not the United States, has also expressed concern over the changes. "We, the undersigned Embassies, are deeply concerned about the results in restrictions on the right of peaceful assembly and the freedom of expression," 22 embassies including France, Germany and the United Kingdom said. Festival organisers say the Pride march poses no threat to children and they are planning to hold the event despite the ban. (Writing by Gergely Szakacs; Editing by Alexandra Hudson)
Yahoo
17-03-2025
- Business
- Yahoo
Hungary's Orban launches food price controls as inflation rebounds
By Krisztina Fenyo and Gergely Szakacs BUDAPEST (Reuters) - Food price controls launched by Prime Minister Viktor Orban went into effect in Hungary on Monday after inflation hit the highest level in the European Union, potentially denting the veteran leader's hopes of re-election in 2026. Hungary has endured the worst inflationary surge in the 27-state EU since Russia's 2022 invasion of Ukraine and prices remain a big concern for households, with official data released last week showing food prices had risen by 7.1% in a year. Squeezed by the inflation rebound and the prospect of a weak recovery, Orban has announced large tax cuts for mothers and imposed a cap on retail price margins on 30 food groups to keep prices under control. "If the government sees that retail chains do not adhere to the regulation, we will extend it to all food categories! The government is also ready to relaunch regulated prices as a last resort," the Economy Ministry said. Annual inflation in Hungary stood at 5.7% in January. Based on the latest comparable Eurostat data, that was the highest rate among EU member states and more than double the bloc's average of 2.8%. During the previous big inflationary surge, food prices rose to average EU levels during 2022-23 and the government imposed price controls then too, a central bank survey found. The bank said the earlier price surge had been caused partly by low productivity and high energy intensity in the food industry - factors which persisted even after inflation started retreating. The previous move to cap food prices backfired as companies offset losses with price increases on other products, the bank said. Hungarian retail group OKSZ says the latest measures could cut food inflation by 1-2 percentage points if there are no further price rises in the supply chain. ING economist Peter Virovacz said inflation could peak at 6.5% in October, with average inflation rising to 5.6%. That would raise the prospect of Hungary running the EU's highest inflation for the second time in three years. The stakes have also been raised for Orban, Virovacz said. He referred to last year's U.S. election, in which Donald Trump returned to the White House amid voter frustration over persistent inflation. Analysts at Wood & Company said the rebound in Hungary's inflation could also test the National Bank of Hungary's pain threshold under new Governor Mihaly Varga, as the rises could eat into the bank's positive rate cushion. The rebound in inflation, driven in part by falls in the forint, has forced the bank to pause rate cuts at the EU's joint-highest level of 6.5%. "We have seen a brutal increase in prices and as far as I can see, they just keep climbing," said Peter Hegedus while shopping for groceries in a Budapest market hall. "There is enormous tension in everyone." (Writing by Gergely Szakacs, Editing by Timothy Heritage)
Yahoo
28-02-2025
- Business
- Yahoo
Analysis-Romania's budget cuts spark backlash ahead of sensitive election
By Luiza Ilie, Gergely Szakacs and Libby George BUCHAREST (Reuters) - Government cost cuts to curb Romania's chronic budget deficit and avert a ratings downgrade are causing a social backlash that risks boosting support for the far-right pro-Moscow candidate in May's presidential rerun. Romania's pro-European ruling coalition is scaling back years of spending that has lifted debt by nearly one-fifth of output from pre-pandemic levels just as the new election nears. See for yourself — The Yodel is the go-to source for daily news, entertainment and feel-good stories. By signing up, you agree to our Terms and Privacy Policy. Authorities are still assessing whether Calin Georgescu can run again in May, after his surprise victory in a December poll that was annulled over alleged Russian meddling. Leading in opinion polls, he plans to end support for neighbouring Ukraine, questions the need for European Union funds underpinning the economy, calls U.S.-driven NATO spending pledges "ultra-secondary" and vows to put Romanians first. Some of the workers affected by the government cuts, which include a freeze on public sector pay and pensions, say that is something the present government is not doing. "All these measures are taken against us. They always are," said Maxim Liceanu, 49, a clerk at state rail company CFR Calatori, which suspended about 240 services in January, including many commuter lines to capital Bucharest. Travel subsidies for students were also curbed, while cuts in higher-paid overtime work have slashed train mechanic Danut Stoica's monthly income by about one-fifth. "We stay home instead of meeting our schedule," Stoica, 54, said at a rally in Bucharest. Elsewhere in the economy, power grid workers have threatened a strike in March over pay curbs, part of a seven-year debt reduction plan agreed with the European Union. In assessing the prospects for a downgrade, the Fitch ratings agency flagged weaker growth and 'domestic political shocks', while some investors say the new U.S. administration's criticism of Romania over the cancelled election is a further risk factor. Consumer sentiment has dropped and inflation was running at the EU's second-highest level in January, signalling a cooling off of the consumer boom that has buoyed Romania's economy. 'WE ISSUE TOO MUCH' The debt-fuelled largesse of the pro-European ruling coalition has opened up one of the highest current account deficits in emerging markets, S&P Global said, exposing it to possible shocks in investor confidence. The government says it needed to support the economy and shield households and businesses during multiple crises, including war in Ukraine. This year it has stressed that it will lower the deficit via cuts rather than hiking major taxes. While at 53% of output, Romania's debt is still below the EU average, foreign currencies make up more than half of borrowing, with 13 billion euros of issuance planned for 2025. "The situation we are facing, and the reason why spreads are high, is that we issue too much," debt agency chief Stefan Nanu said. "Otherwise, we do see investor appetite. Romania is attractive for investors. The key is a lower budget deficit." Romania's economy slowed sharply last year despite the surge in pre-election spending. U.S. tariffs on Europe could further crimp growth, challenging the government's 2.5% assumption that underpins its deficit reduction drive. "A potential commercial war between the United States and the EU will create recession in Europe, and then things will get complicated," central bank Governor Mugur Isarescu said. He said the bank would give the tightly-controlled leu "more flexibility" if political tensions eased later in the year after spending what JP Morgan estimates is over 10 billion euros on interventions in 2024. The bank does not comment on interventions. A source briefed on an investor meeting said the government showed "a bit higher commitment than in the past" to deliver on the cuts, although investors remain cautious after Romania went from targeting a 5% deficit to a nearly 9% shortfall last year. Given Romania's low tax revenue, there could be scope for tax hikes. But with state-owned companies paying hefty bonuses and some public sector retirees enjoying lavish pensions while Romanian wages languish among the lowest in the EU, tax hikes are a hard sell. "Even if improvements are needed to achieve the 7% budget deficit target in 2025, we expect Romania's fiscal policy to be flexible and help it remain a member of the (investment grade) club," Raiffeisen economists said. "However, the matter remains challenging, as Romania has never had to consolidate its finances to such an extent over a longer period in its recent history." Fitch Ratings Director Greg Kiss said it was uncertain how long the coalition would last, making the seven-year debt reduction timeframe a concern. (Additional reporting by Marc Jones in LONDON; Writing by Gergely Szakacs; Editing by Mark John and Philippa Fletcher)
