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In September, the main figures for external trade in goods were positive. The first estimate shows that the value of exports fell by 5.1 percent and imports by 19.4 percent, resulting in a surplus of EUR 1,263 million, compared with a deficit of EUR 813 million a year earlier, writes Index.
“The surplus is more favorable than in the previous two months, also due to seasonal effects (summer shutdown of factories), but it is lower than in June,” said Gábor Regős, senior analyst at the Makronóm Institute. The analyst pointed out that energy prices rose significantly in the reference period, making imports and exports more expensive. However, energy prices pulled imports back more, given Hungary’s import exposure.
On the import side, prices fell by 12 percent in August this year, while prices on the export side fell by 2.2 percent. If the price indices in September were the same as in the previous month, it means that the fall in imports may have been accompanied by a stagnation in exports.
Export-producing sectors are therefore still holding firm, and the stronger forint exchange rate than last year will not hold back their activity,”
said Regős, noting that low domestic demand is, however, pulling back imports. This will ultimately lead to a significant improvement in the current account balance.
Based on external trade data, last year’s large current account deficit of more than eight percent could turn into a surplus this year, but the increased income outflow in the first half of the year, due to profit-driven inflation, will prevent this.
Paradoxically, we are somewhat hopeful of a deterioration in the balance in the period ahead,”
the expert stressed.
He explained that this would of course be good to see, not because of a fall in exports, but because it would show a pick-up in domestic demand: consumption and investment have a significant import component, so both improving income conditions and a pick-up in investment (arrival of EU funds, falling interest rate environment) would worsen the balance. However, this does not imply that the current account would reach a significant deficit, with the balance remaining stable at around zero in the coming years, driven by export growth.
Via Index, Featured image: Pixabay