Hungarian Economic Woes Prompt Call for Euro by Business Leader

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The head of one of Hungary’s biggest manufacturers called for euro adoption after policies under Prime Minister Viktor Orban produced one of the worst economic crises in the European Union in the past year.

After a year-long recession, a brush with a currency crisis, the bloc’s fastest inflation and the suspension of crucial EU funding over democratic concerns, Hungary should waste no time committing to joining the euro and embracing the EU’s values, according to Otto Sinko, the co-chief executive officer of contract manufacturer Videoton Zrt.

At the same time, Orban’s government has grown closer to Russia and China even as much of the rest of the EU takes measures to curb their influence. The forint has dropped more than 30% against the euro since Orban returned to power in 2010. Its weakening accelerated last year as record pre-election spending turbo-charged an EU-wide surge in prices while emergency monetary policy moves undermined investor confidence. The forint fell near a six-month low last week.

While inflation is expected to slow to single-digit territory before year-end and the government sees the economy growing from the third quarter, the question of how to cement those gains while shoring up the budget has revealed fault lines among top policymakers.

 

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