Economy
Hungary’s slide into autocracy to continue after Orbán's victory
Supermajority secured if only by a single mandate
Hungary held parliamentary elections on Sunday, where the ruling party Fidesz, along with its junior ally, the Christian Democrats (KDNP), managed a resounding victory.Preliminary election results suggest that the ruling party has successfully regained its constitutional supermajority, which was lost during the last term following the result of a by-election. With about 99% of votes counted, Fidesz-KDNP secured 133 out of 199 seats in Parliament, just reaching the two-thirds threshold required for implementing changes to Hungary’s Constitution.
National right-wing Jobbik was the 2nd most popular party, with 26 projected seats in Parliament. Socialist MSZP-Párbeszéd coalition only managed to secure 20 projected seats, while Democratic Coalition DK is likely to have won 9 seats and green-liberal party LMP is likely to take 8 seats.
Limited market reaction, further erosion of independent institutions foreseen
Kalen expects limited near-term market impact from Fidesz’s parliamentary gains. She said markets essentially ignored Fidesz’s loss of its super-majority on 22 February, 2015, with the currency stable and rates market nonchalantly continuing its descent lower in the aftermath.Kalen also believes pressure on the forint may be modest. Following yesterday’s electoral outcome, she anticipates stable rates markets, “while HUF may weaken marginally on market expectation of the National Bank of Hungary’s unfettered continuation of its unconventional, ultra-loose monetary policies."
Vast majority of Constitutional changes likely already implemented
“Heading into this spring’s Parliamentary elections, although most market participants likely anticipated that Fidesz would fall just shy of the supermajority (based on indications from various polls in the lead-up to elections), that Fidesz managed to regain two-thirds of Parliamentary seats does not materially alter the course of economic and fiscal policy-making in Hungary," Kalen said.She noted that during prior terms, using its constitutional majority,
Fidesz had already implemented the desired overhauls to the judiciary, the media, the electoral system, and placed curbs on civil society. Further erosion of independent institutions will likely continue during this term, but the course has already been determined at the onset of this decade.
Hungary’s relationship with the EU will likely be strained further
Kalen believes that “Hungary’s Parliamentary election results will likely provide robust validation for the nationalist, populist, and xenophobic ideology espoused by Prime Minister Viktor Orbán."Additionally, populist politicians across the world may adopt the aggressive electoral tactics that Orbán successfully employed (e.g. strong anti-immigrant messaging, demonizing the EU and Western countries, media distortion).
“The results may include continuing strains in Hungary’s relationship with the EU, which has thus far been powerless to stem Hungary’s slide into autocracy," Kalen warned.
