He linked the stronger outlook to the release of €16.4 billion in European Union money. The policy focus is on productivity gains, some of which he said will show up over a longer horizon.
Karman did not unpack details from a long-anticipated fiscal plan slated for later this month, but he said the government will cut costs by scaling back oversized state contracts that had gone to allies of former Prime Minister Viktor Orban. "With a credible reduction in the deficit and euro accession path, we can expect a further decline in yields," he told the forum.
Growth forecasts and currency plans tend to move together in emerging Europe. Market Briefs covers the region free every weekday.
This year, both Hungarian bonds and the forint climbed following Peter Magyar's April victory over Orban and his pledge to meet the euro-adoption benchmarks by 2030. The state debt management agency's chief executive, Gergely Tardos, said that talk of adopting the euro has expanded the pool of overseas buyers for Hungary's bonds, attracting more long-term investors like sovereign wealth funds and cutting dependence on short-term hedge funds. He added that yields should keep converging toward euro-area levels, though the recent global selloff has clouded where core-market borrowing costs will sit during Hungary's own convergence.
Investors are watching for the cabinet's budget presentation on how Hungary plans to converge with the euro area. "The government isn't facing an impossible task," OTP Bank Chief Executive Officer Peter Csanyi said at the conference, pointing to a range of one-off spending items this year. He also urged phasing out "discriminatory" taxes, including those on the financial sector. Still, he cautioned that the recent burst of growth, with industrial output jumping the most in years, has been driven almost entirely by BMW AG's plant in Debrecen.
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