ANNUAL REPORT 2011 - Magyar Fejlesztési Bank Zrt.

THE OPERATING ENVIRONMENT
OF MFB HUNGARIAN DEVELOPMENT BANK
PRIVATE LIMITED COMPANY IN 2011
Recovery from the global economic crisis halted after a
promising start in early 2011. Employment and government
indebtedness lurked at stubbornly high levels in the second
half of the year. Additional rounds of monetary stimulus
raised queries and the banking system was marred
with lack of confidence. The outlook of the Eurozone,
which carries fairly high priority for the Hungarian
economy, worsened considerably with diverging
processes questioning the foundations of integration with
much greater vehemence than ever before.
The internal drivers of growth failed to start in the Hungarian
economy in 2011. Corporations tended to move into something
like “hibernation” or operating in restraint mode, which could
become an impediment to sustained growth and also reduced
the predictability of debt management. The extreme volatility of
exchange rate movements, the overall weakening of the national
currency and the steady rise of the country’s risk premium spelt
hardships for external funding for both the Hungarian economy
and MFB.
Global economic processes
Providing the broader backdrop to the operations of MFB Hungarian
Development Bank, the global economy took a promising start
in 2011 as recovery from the crisis accelerated transitionally
during Q1. However, maintaining the rate of growth failed and Q1
performance was fundamentally driven by unique factors. Starting
the second quarter of 2011, the rate of economic growth faltered
visibly both in developed and emerging regions and helped the
annual growth of international trade subside to a single digit.
Beside the sovereign crisis, the economic consequences of the
political havoc engulfing Northern Africa and the Arab Peninsula
coupled with Japan’s nuclear disaster to contribute to the
slowdown of global growth.
SOURCES: EUROStat, NatiONal BUREaU Of StatiStiCS Of ChiNa
After mid-2011, global economic processes sent repeated
crisis signals as growth subsided noticeably with the most of the
ills focused in the old continent (and especially the Euro Area):
by the end of the year most indices of economic sentiment were
approximating levels seen during the crisis two years ago, revealing
the bare real economic impact of the sovereign crisis hitting
the member states. In the early part of 2011, growth of Europe’s
single currency economies was driven by capital expenditure and
construction projects delayed from late 2010 due to bad weather
and by making up for lost production, but the upswing of Q1 (2.4%
yoy) was followed by gradual deceleration (Q2: 1.6%, Q3: 1.3%,
MFB ANNUAL REPORT 2011
5