The forint continues its weak trend: here are two new negative factors

HUNGARY - In Brief 05 Mar 2024 by Istvan Racz

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EURHUF continued to hover some 3% or even more above this year's starting level today. In addition to everything else known so far, two new factors have just shown up, which may reinforce the current, moderately negative sentiment towards the forint. First, the detailed Q4 2023 GDP data was published this morning. As to the main facts, that GDP stagnated on qoq basis, after a more encouraging 0.8% pickup in Q3, and that it implied 0.5% yoy growth for Q4 and a 0.7% decrease in full-year 2023, the latter two just marginally stronger than the preliminary numbers, there was no surprise at all. But the fact that excluding agriculture, which recovered massively from its weather-related output debacle of 2022, GDP was once again even weaker, with -0.2% qoq, -1.5% yoy in Q4, and that implied a 2.4% setback in full-year 2023, was certainly a notable new fact, and quite a negative one. Second, all of the prime minister and the finance and economy ministers spoke at the Hungarian Chamber of Commerce and Industry's year-starting conference early this week. On this occasion, finance minister Varga gave a new figure for the main fiscal deficit indicator, the general government balance, of 2023, and guess what, it once again proved to be a bit higher than previously, this time given at 6.5% of GDP, up from 5.9% previously and the 6.2% actual in 2022. This is still a rough estimate, the preliminary actual being expected from KSH on April 3, but after a series of upward revisions at the rough estimate level, the market could actually suspect that perhaps the figure could climb even higher than this. For a fact, the general government's net borrowing requirement, a similar but far not i...