Trump's victory could increase economic risks for Hungary - Reuters

Donald Trump's victory in the US presidential election may politically strengthen Hungarian Prime Minister Viktor Orban, but threatens the country's economy by increasing inflationary risks.

This is reported by RBC-Ukraine with reference to Reuters.

Trump plans to impose tariffs on the European auto industry, which could lead to a decline in production and a weakening of the Hungarian forint, which has already lost ground after the recent rate cuts by the Hungarian central bank.

According to analysts, Trump's victory could result in a further decline for the forint. In particular, Roger Mark of Ninety One noted that Trump adds risks to Hungary, especially given the country's close ties to the European automotive sector. This could prevent further rate cuts in Hungary and even lead to an increase in interest rates in the coming months.

The European Commission's economic model predicts that Germany and Italy, which are closely linked to the Central European economy, will suffer the most from the new tariffs. According to J.P. Morgan, investors have revised their forecasts for rates in Hungary, expecting a slowdown in their decline amid uncertainty after the US elections.

Political pressure on the Hungarian central bank is growing as the Orban government insists on sharp rate cuts before the 2026 elections. Ahead of the change of the head of the central bank in March, it is expected that the priority will be to fight inflation, which previously reached a record level in the EU.

Author - Olena Madiak, 13/11/2024