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Euro Zone Concern Grows on Hungary Situation

Euro Zone Concern Grows on Hungary Situation

According to a government official in Hungary, the economy there is in a “very grave situation”.  Peter Szijjarto, a spokesman for the leadership said that it was not an exaggeration to mention a default.

The comments gave markets around the world further cause for worry over the already-troubled euro zone.  

Hungary’s public debt was 78 per cent of GDP in 2009 yet compared with Greece’s 115 per cent, this number seems less significant.  

There are comments from within the Hungarian economy that the situation would be worsened if fiscal policies were relaxed, but that the country is not yet anywhere near close to defaulting.

Analysts from outside of Hungary also found Mr Szijjarto’s comments strange and worrying.

Saying that he was giving foreign investors – especially bondholders – undue cause for concern, some said that Mr Szijjarto was playing with a potentially dangerous situation.

Not surprisingly on the currency market, the Hungarian forint fell by 2.8 per cent in the day’s trade, ending at 286.71 forints per euro by close of business.