What is happening to European countries’ economies?
The Federal Reserve is likely to raise interest rates significantly next week, which sent European equities down on Wednesday. However, a surge in retail stocks headed by Spain’s Inditex restrained falls. The STOXX 600 index for the entire continent fell 0.1%. Rate-sensitive technology stocks fell by 0.5%. In Europe, the banks’ index grew 0.5%. Data released on Tuesday revealed that U.S. consumer prices increased more than anticipated in August. It’s giving the Fed justification to raise interest rates by another 75 basis points on Wednesday.
Hungary’s GDP
Even though the western counties tend to be wealthier and more developed than the eastern counties, this distinction is not all that surprising. West of the Danube River, certain counties are even more impoverished than other counties in the east. The Budapest metro area is the only region of Hungary that stands out for having an unexpectedly high per capita GDP output level. Budapest’s metropolitan area has a GDP per capita that is 202% higher than the national average and 136% more than the EU average. All other regions of Hungary have GDP per capita that is less than the European average. The county closest to it, Gyr-Moson-Sopron, has a GDP per capita that is 92% of the EU average.
In terms of the majority of economic indicators over the past few decades, Hungary has been in front of Slovakia. However, Hungary virtually stagnated until around 2012, while Slovakia saw a spectacular era of tremendous progress. During this period, Slovakia overtook and passed Hungary. Due to Hungary finally generating fast economic growth between 2012 and 2019, which was faster than Slovakia, Hungary is now slightly ahead of Slovakia once again.
Slovakia, another European state, grows more quickly one day, Hungary the next. I hope both nations prosper greatly in the ensuing decades. According to the meeting minutes released on Wednesday, the Hungarian rate-setters unanimously decided to increase the basic interest rate by 100 basis points, to 11.75% (HUINT=ECI), on August 30. The minutes stated that “the continued rise in inflation and enduring inflation threats required the determined continuation of the tightening cycle.” On September 27, the next regular policy meeting is scheduled.
Portugal, a European country sells bonds worth 1.25 billion euros
Following the ECB’s interest rate hikes from record lows despite rampant inflation, Portugal sold all 1.25 billion euros ($1.25 billion) of four-year and 10-year bonds on the market in an auction on Wednesday, with yields sharply jumping from earlier sales. The allocation yield on the bond maturing in 2026 increased to 1.777% from 0.217% in the prior auction of a comparable duration in March, according to the state debt agency IGCP, while the yield on the bond maturing in 2032 increased to 2.754% from 2.330% in June. Around 2.8% is the benchmark 10-year bond rate on the secondary market. The IGCP sold 2026 bonds for 470 million euros and 2032 bonds worth 780 million euros, with demand exceeding supply in both cases by 1.72 times and 2.02 times, respectively.
