Hungary's Financial System Shaky, but Will Survive

Katrina Shankle/ Fri. April 18, 2008/ Global Economics

Just because the financial system of Hungary is vulnerable, doesn't mean it won't survive. The National Bank of Hungary's Monetary Council laid those fears to rest on Tuesday (April 15). Their predictions are, according to the Budapest Times, that the financial system will withstand all shocks from the global economy.

The government has taken the steps to make adjustments within the national budget as well as a few reforms to protect the Hungarian economy from the global economic crisis. It has reduced the risks, but there is still a slump being felt within economic growth and there has been an increase in the national debt.

The slowdown in Europe has caused a negative shrink on export demands which will naturally hurt Hungary. Ultimately, all this can be traced back to the U.S. subprime mortgage crisis and the resulting recession that no one can agree whether or not we're in the midst of. One of the other great financial risks is that of foreign currency loans, especially those linked to the Japanese yen.

On average, Hungarians spend about thirteen percent of their household income on debt. The poor of Hungary, however, might spend as much as twenty percent.

http://www.budapesttimes.hu/index.php?option=com_content&task=view&id=6984&null