Hungary’s external balance indicators improved last year, in spite of the pandemic, the National Bank of Hungary (MNB) said in its quarterly Balance of Payments Report published on Tuesday.
Hungary had a current-account surplus for the year at 2.1 percent of GDP. External debt indicators reached historical lows at 8 percent of GDP, in line with the regional average and at 2019 levels. The FX reserves “significantly exceeded” levels expected and deemed safe by investors, the report said.
Hungary’s gross external government debt edged up to 58 percent of GDP, the MNB said.
The downturn in tourism and transport reduced Hungary’s surplus in trade of services, but that impact was offset by lower import demand and an expansion in exports on the back of a recovery in industrial output and an improvement in terms of trade, according to the report.
Hungary’s net external position using the savings approach was roughly zero during 2020 as net government borrowing rose because of falling revenue and a sharp increase in expenditures, while the financial savings of the private sector rose.
The report shows FDI inflow in Hungary was close to 2.4 billion euros, but net FDI inflow was around zero because of domestic companies’ investments abroad.
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Foreign-owned companies’ profits fell to 5.6 billion euros in 2020. At the same time, reinvested earnings declined and the ratio of profit repatriation rose close to 60 percent, the MNB said.