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Friday, April 04, 2008

Hungary External Trade January 2008 Update

We now have detailed results for external trade for January confirm the positive impression given by the preliminary results (reported on here).

As anticipated, Hungary's monthly trade deficit continued to reduce in January as exports rose faster than imports. The shortfall was 79.5 million euros ($124.5 million), compared with 170.2 million euros in December and 219.3 million euros in January 2007, according to data released by the Budapest-based statistics office KSH this morning. The figure was revised from a 70.5 million-euro preliminary estimate.

Hungary's trade gap has been narrowing for two years now as export growth picked up and government measures to cut the budget deficit have constrained consumer demand for imported products. Exports in January rose 19.4 percent from a year ago, while imports increased 14.7 percent. In January Hungary sold 77 percent of its exports to European Union countries, while 65 percent of the imports arrived from within the EU.

What we can see clearly from the chart is that exports in January far more vibrant than they were in the doldrum months of October to December (which may give some slight optimism for a slightly better reading on GDP in Q1 2008), and this is consistent with the general picture we have been getting from Germany, and some other CEE countries like Poland, the Czech Republic and Russia that trade in the January to March period may have held up reasonably well. But there are now evident signs that the eurozone and UK economies are starting to slow, and severe inflation issues are now affecting many CEE economies, so the future going into Q2 2008 looks far more uncertain. However looking at the data I can only concur with the Portfolio Hungary conclusion that - if things continue as they are "in a few months Hungary will certainly reach the stage when the trade balance will be in a surplus on an annual basis".

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