Mostly good news, but not in every respect

HUNGARY - In Brief 13 Nov 2020 by Istvan Racz

---

Today's announcement of +11.3% qoq, -4.7% yoy sda real GDP growth for Q3 is certainly good news. Previously, GDP fell by a cumulative 15% qoq in H1, so quite a big part of that setback has been reversed. The average of analyst expectations for Q3 was -5.2% yoy, and honestly, we were on the pessimistic end in this regard. The actual data means that GDP fell by 5.4% yoy in the first three quarters of 2020, which does not look terribly bad compared to -3.9% for the US, -7.5% for the Euro Area and -11.1% for the UK.The other piece of good news was yesterday's launch of EUR 2.5bn of 10 and 30-year bonds by the Treasury at 0.85-1.6%-points above EUR midswap was also definitely good news. The government, including PM Orbán has been stressing in recent days that whatever shocks may come in the future, Hungary's external financing is secured for the next two years. The latter sounds as a somewhat ambitious statement, but it correctly refers to that fact that Hungary has sold EUR 6.5bn of new FX bonds internationally this year, against some EUR 2.4bn of total FX redemptions (foreign and domestic, bonds and loans together), and that scheduled redemptions for the next two years look like EUR 3.5bn as far as FX-denominated external bond debt is concerned.A third piece of good news is that the systematic rapid increase in daily Covid infection numbers has been broken in recent days, and the positivity ratio of Covid testing is falling somewhat. So it looks like the authorities are starting to catch up with the pace of the contagion and also to bring Covid under control again. And this is still not due to the most recent partial lockdown measures, as the latter took affect only two d...