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Friday, December 21, 2007

Hungary Foreign Trade October 2007

Hungary's October foreign trade surplus exceeded the EUR 41.6 million preliminary figure by EUR 6 million, according to a revised Central Statistics Office report. Thus the country's total foreign trade gap for the first 10 months of 2007 was down EUR 356 million, a mere 16% of the deficit in the same months of 2006.As can be seen from the chart below, since the summer of 2007 the situation has improved considerably.

On a year-on-year basis, October saw exports and imports grow by a respective 17.4% and 13.5%, a 3.8 percentage point difference in the growth rates. The year-on-year increase in exports significantly exceeded that of imports in each month since February 2007, the much impoved performance of Hungary's foreign trade balance therefore does not come as a complete surprise. If we look at the chart below, we can see that while the annual rates of increase of imports and exports do track each other somewhat (indicating a high level of intermediate processing, or transit) the rate of increase in exports is clearly consistently above that of imports.

It will now be very interesting to see the third quarter balance of payments data, since remember Hungary's problem is that just as quickly as she earns a little bit extra from all that hard export payment, off out it goes again in the form of interest payments on loans and dividends on equities.

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