Moody\u2019s Ratings on Friday augured improved relations between Hungary and the European Union, after completing a periodic review of the country\u2019s sovereign ratings.<\/p>\n
\u201cHungary\u2019s ratings, including its Baa2 long-term issuer ratings, are supported by a diversified economy with moderate trend GDP growth, and our expectation of improving relations with the European Union under the new government that aims to unlock significant funds from the Recovery and Resilience Facility (RRF) and the multi-annual financial framework (MFF),\u201d Moody\u2019s said<\/a>.<\/p>\n \u201cCredit challenges arise from wide fiscal deficits since 2020, and deep-rooted institutional and governance weaknesses,\u201d it added.<\/p>\n Moody\u2019s \u201creassessed the appropriateness of the ratings\u201d in the context of the relevant methodologies and recent developments, the rating agency said, while noting that the announcement of the periodic review was not a credit rating action or an indication of whether or not a credit rating action was likely in the near future.<\/p>\n Moody\u2019s forecasts Hungary\u2019s GDP growth will accelerate from 0.5pc in 2025 to 1.9pc in 2026 and 2.2pc in 2027, boosted by private consumption and a gradual recovery in investment growth due to improved sentiment and inflows of EU funding from late 2026.<\/p>\n Moody\u2019s expects the general government deficit to widen to \u201cat least\u201d 5.2pc of GDP in 2026, reflecting pre-election spending by the previous government.<\/p>\n \u201cWe expect gradual fiscal consolidation to resume under the new government, though the path remains uncertain, as it has not yet presented a comprehensive fiscal plan and has signaled it will first conduct a fiscal audit before setting out detailed consolidation measures,\u201d Moody\u2019s said.<\/p>\n Moody\u2019s sees Hungary\u2019s state debt, relative to GDP, climbing to 76.3pc in 2026 and 77.1pc in 2027.<\/p>\n The negative outlook on Hungary\u2019s rating \u201creflects downside risks to our outlook for fiscal and debt metrics and Hungary\u2019s economic performance which could turn out weaker than what we currently expect,\u201d Moody\u2019s said.<\/p>\n \u201cWe would likely change the outlook back to stable if there is a significant and durable improvement in Hungary\u2019s relationship with the EU,\u201d it added.<\/p>\n