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Hungary's Economy Continues To Post Significant Trade Surplus

Tamás Székely 2015.02.03.

Hungary posted a trade surplus in November of 843.1 million euros, the Central Statistical Office (KSH) said in a second reading of data. The surplus was raised from 831.8 million euros in the first reading released on January 9. Exports rose by 3.1% to 7.616 billion euros while imports were up 2.1% at 6.773 billion euros. In volume terms, both exports and imports rose by 5%, faster than in euros. The January-November trade surplus was also revised slightly up to 6.177 billion euros. Exports increased by 3.5% to 78.032 billion euros. Imports were up 4.0% at 71.855 billion euros. Eleven month exports rose by 6.7% in volume terms and imports rose by 8.2%, also at a quicker pace than euro-term trade.

Hungary’s seasonally-adjusted Purchasing Managers Index (PMI) also rose in the last couple of month. It reached 54.2 points in January from 50.9 points in December, the Hungarian Association of Logistics, Purchasing and Inventory Management (HALPIM), which compiles the index, said. An index value above 50 shows expansion in the manufacturing sector, while a value under 50 signals contraction. The index has been over the growth threshold for more than a year. HALPIM said the index was above the long-term January average of 52.0 points and had also exceeded the 53.4-point January average of the last three years. Among the sub-indices that comprise the PMI, the production volume index and the new orders index rose from December. Delivery times lengthened further, although the pace of the increase slowed. Purchased stocks were up for the fifth month in a row.

Meanwhile Hungarian economic research institute GKI forecast around 2% GDP growth for the country in 2015 in its latest monthly projection. The projection is in line with what GKI saw in December for this year, when it raised its estimate for last year, 2014, to 3.2% from 3.0%. The slowdown should continue in 2016, too, GKI added. Due to the uncertain European recovery and the waning base effect of car industry investments in Hungary, exports should slow this year, while imports could slow even more, due to weaker domestic demand and low energy prices. This could result in a trade surplus of 8 billion euros after last year’s 6.7 billion euros. The current and the capital account surpluses, however, will diminish, especially because shrinking EU development funding which will decrease by 2 billion euros from last year, GKI said. Deflation should continue for a while, but annual average inflation is expected to rise to 0.5% this year from minus 0.2% last year, GKI said. The research company expects the euro to average at 315 forints this year after 308.7 in 2014.

via photo: public domain