Hungary’s benchmark BUX index surged to an all-time high on Tuesday as investors responded positively to the political transition following the end of Viktor Orbán’s 14-year premiership. The index closed at 52,345 points, surpassing the previous record set in 2021. Analysts attribute the rally to expectations of economic policy shifts under the new government, including potential easing of financial restrictions and improved relations with the European Union.
The forint, Hungary’s national currency, also strengthened against the euro, trading at 385 HUF per EUR by midday. This marks a significant recovery from its low of 410 HUF per EUR in late 2022. The currency’s gains reflect improved investor confidence, which had been dampened by years of tight fiscal policies and disputes with Brussels over rule-of-law issues.
Newly appointed Finance Minister József Varga signaled plans to review the central bank’s independence and revisit controversial tax policies introduced under Orbán. Varga stated that the government aims to restore market trust by reducing state interference in the financial sector. His remarks came as the central bank kept interest rates unchanged at 13%, a move seen as a temporary measure to stabilize inflation.
Economic forecasts from the Hungarian National Bank suggest GDP growth of 2.5% for 2024, up from the 0.5% contraction recorded last year. However, risks remain, including high public debt at 73.5% of GDP and lingering concerns over EU funding freezes. Investors are closely watching whether the new administration can deliver on promises of structural reforms without triggering social unrest amid rising living costs.
The stock market surge contrasts sharply with the stagnation seen during Orbán’s final years in power, when economic growth slowed and capital controls discouraged foreign investment. Political analysts note that the transition has already reshaped Hungary’s economic narrative, though the durability of these gains will depend on policy execution in the coming months.
Source: e24.no