Business in Hungary Flails as Region’s Crisis Worsens

A recent Thomson Reuters survey revealed that business in Hungary suffered over the last quarter, resulting in a drop of the average for the EU’s eastern economies.

The Thomson Reuters & OeKB Central and Eastern European Business Climate index fell to 14 points in January. Hungary’s progress, or lack thereof, was the most dramatic, falling 27 points to -31. Eastern European economies have a bleak outlook for the coming months as financial markets fail and the EU and IMF back off.

“Business expectations deteriorated sharply as well, not least due to the Hungarian government’s controversial measures such as the foreign currency law or the launch of special taxes for certain sectors including banks, energy and trade,” the report said.

Austrian OeKB added that “Russia and Ukraine appear to be less affected by the euro zone debt crisis or the economic developments in the EU.”

Austria itself has been hit hard as a result of Hungary’s latest move, which allows its domestic borrowers to return currency loans at lower rates.

Eastern Europe’s economic outlook indicator fell from -6 to -10 last year. Its negative value is in itself significant, falling below zero for the first time in over two years.

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