Published: November 16 2023
The Hungarian forint is experiencing a boost as Budapest's current account surplus continues to grow. This is a positive sign for the country's economy and may indicate a more favorable current account balance for the year.
Increase in Goods Balance Surplus
In September, the goods balance surplus increased compared to the previous month and the same period last year. This growth was driven by a decline in the value of imports, influenced by lower industrial output and declining export sales.
Services Balance and Income Balance
Within the services balance, the transport and tourism sectors were the most important. The income balance showed a slight deficit, with corporate profits increasing and interest expenditure rising. General current transfers also showed a deficit, with a slight increase in transfers from the European Union.
External Financing Capacity
The external financing capacity, as calculated in the real economy, improved compared to the previous year. This improvement is in line with an increase in foreign direct investment (FDI). Net external debt from transactions decreased, and there was an increase in net FDI stock primarily due to reinvested earnings in Hungary.
Overall Outlook and Implications
The September data indicates a positive outlook for Hungary's current account balance and overall economy. The current account surplus may be more favorable than previously reported, which is a promising sign for the country's economic growth.
Questions & Answers
What is the current account surplus in Hungary? The current account surplus in Hungary increased to EUR 559 million in September.
What are the main factors driving the current account developments in Hungary? The main factor driving current account developments in Hungary is the change in the goods balance. The goods balance reached a surplus of EUR 409 million in September, with a significant increase compared to August.
Why did the goods balance in Hungary increase in September? The goods balance in Hungary increased in September due to a 22 percent year-on-year decline in the value of imports. This was driven by a combination of a moderating energy import bill and subdued domestic demand.
Which sectors contribute the most to the services balance in Hungary? The two most important sectors within the services balance in Hungary are transport and tourism.
What is the income balance in Hungary? The income balance in Hungary showed a deficit of nearly EUR 800 million. This was slightly lower than the previous month, but higher on a year-on-year basis due to increased corporate profits and rising interest expenditure.
What is the external financing capacity in Hungary? The external financing capacity in Hungary improved by about EUR 1.8 billion compared to September last year, similar to the current account. This improvement was driven by an increase in foreign direct investment (FDI) and a decrease in net external debt from transactions.
What is the financing capacity calculated on the financing side in Hungary? The financing capacity calculated on the financing side in Hungary was EUR 638 million.
What does the favorable September figure imply for Hungary's current account balance? The favorable September figure implies that this year's current account balance as a share of GDP may be more favorable than the minus 0.6 percent of GDP reported in the September Inflation Report.