The latest polls suggest that Viktor Orbán’s long-ruling Fidesz party could lose power in Hungary’s parliamentary election on 12th April. This Update answers five key questions on the implications of the vote. The short point is that a change of government could mark a major turning point for the economy, reversing institutional backsliding, allowing for improved relations with the EU and higher fund inflows. This could support a rally in local financial markets, although we suspect that resistance to reform from within Hungary’s institutions may prevent a full unwinding of political risk premia. And in the near term, whoever wins will have to tighten fiscal policy to rein in the large budget deficit.
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