http://portfolio.hu/en/cikkek.tdp?k=2&i=20314

Hungary is among the top performers in Europe as far as fiscal performance is concerned, a fact that went a long way to help "heal" panic-stricken markets after the alarming statements of the new government, London-based analysts commented in the latest emerging market reports.

In its weekly emerging market note, BNP Paribas has covered Hungary in a separate chapter discussing the market hesitation caused by the new government’s statements, and the subsequent announcement of the economic agenda. The report comments favourably on the latter, praising the government for "significantly more constructive" communication, wire service MTI reported.

As regards the earlier comments that drew a comparison between Hungary and Greece, BNP Paribas has argued that last week’s PR mayhem was lacking in substance. Hungary’s fundamentals are not only much better than suggested by Fidesz but also generally in a healthy state in a regional or even EU-level comparison, the note commented.

Based on this, BNP ranks Hungary among the EU’s top three fiscal performers, therefore "painting gloomy scenarios does not seem appropriate".

The research note compares cyclicaly adjusted fiscal balances for Hungary, Poland, the Czech Rep and Greece, of which only Hungary has a surplus. In a commentary to the charts, the analysts declare that Hungary is the "regional champion of fiscal consolidation and certainly not Greece!"

BNP argued that recent comments by Fidesz politicians probably did not surprise those familiar with the "bitter infighting that is commonplace in Hungarian politics". By the way, these were obviously meant for a domestic audience rather than international investors, the report added.

However, the report notes that government commentaries were extremely ill-timed, considering the intensifying turbulence in global markets and general sell-off in European assets.

Unfortunately, "the suggestion that "Hungary is the next Greece" will, unfortunately, be remembered by investors for a long time and may not help bonds and the currency."

A 100 bp increase in yields raises government interest payment by 0.8% of GDP, and 5% currency depreciation comes at an expense of losing 0.4% of gross national product. "Politicians should be aware of these numbers," BNP noted.