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You are here: Home Finance & Business Financial crisis leaves euro with new popularity Crisis-hit Hungary: the worst is yet to come

22/06/2009Crisis-hit Hungary: the worst is yet to come

The economic crisis is spreading through Hungary from the financial sector to manufacturing industries and services.

Budapest -- In Hungary, one of the countries hardest hit by the global financial crisis, most believe that the worst is yet to come, with the economy struggling and facing more pain from severe austerity measures.

"I really don't know how we will survive the crisis," said Levente Benedekfi, a construction company owner who told AFP his business has suffered terribly since the crisis hit in late 2008.

In 2008, the number of new apartments sold was half the 2007 figure, official figures show, and the outlook remains grim for 2009.

In Budapest alone, between 2,000 and 2,500 new sales are expected in 2009, compared to 2008’s already low figure of 7,000.

"While we usually sell between 10 and 15 apartments a month, we have sold altogether two flats in the last nine months," said Benedekfi, who now has 480 empty apartments.

AFP PHOTO / ATTILA KISBENEDEK
A sign advertises flats on sale on the wall of the brand new Mandarin Park in Budapest on 12 June  2009

"In addition, the company has a Swiss-franc-denominated debt of HUF 3 billion (EUR 10.7 million, USD 15.1 million), which we expected to pay back from the sale of the apartments," he said.

Many Hungarians borrowed heavily in foreign currencies because forint interest rates were higher but with the weakening of the Hungarian currency, monthly repayments literally "exploded", said Benedekfi.

He and his associates now plan to mortgage their own properties, "the family silver" as he put it, to try to survive.

The future is far from bright

"The effects of the crisis have been spreading from the financial sector, through industries like car manufacturing to engulf services," David Nemeth, an analyst with ING Bank, told AFP.

"By now, the downturn has hit suppliers and subcontractors too, resulting in chains of debt, most frequently in the construction sector," Nemeth said.

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