Hungary External Trade March (Preliminary)

Hungary had a trade surplus in March for a second consecutive month as exports rose faster than imports. The surplus was 169.6 million euros, compared with 157 million euros the month before and 118.3 million euros in March last year, the Hungarian statistics office (KSH) said today.

The trade shortfall has been shrinking for two years as exports picked up and government measures to reduce the budget deficit have weakened consumer demand for imports.

Exports rose 3.9 percent from a year ago and imports increased 3.1 percent. In the month, Hungary sold 75 percent of its exports to the European Union, with 69 percent of imports arriving from within the EU.




The growth in exports of only 3.9% was down considerably from the much higher rates achieved in January and February, and this is the number to watch for in the months ahead.

Hungary Industrial Output March 2008

Hungary's industrial output rose by 1.9% year on year in March, according to unadjusted data and was up by 4.3% yr/yr, according to figures adjusted for working days, the Central Statistics Office (KSH) reported on Thursday. The adjusted growth data has not been so weak since February 2005. Industrial output grew by 6.9% yr/yr in the January-March period.



Output decreased by 2.6% month on month (vs. +2.3% in Feb), according to figures adjusted seasonally and by working days.

The KSH is scheduled to release detailed data on the industry on 15 May.

Bartosz Pawlowski, Toronto Dominion Bank, London

“March industrial output increased by 4.3%yoy (which means 1.9%yoy in unadjusted terms). This is the slowest pace of production growth since March 2005. Although a part of the weakness in March data can be explained by a much better February result, it seems that weaker exports are taking their toll on the Hungarian output."

“Industrial production has been trending downwards since early 2007 adding concerns that the economic growth will continue to disappoint. This is particularly the case given the ongoing weakness in consumer spending, as evidenced by negative growth of retail sales."

Gábor Ambrus, 4Cast, London

“Prelim Hungarian industrial output came in at 4.3% y/y, slightly above our 3.0% y/y forecast and a good margin below mkts 7.8% consensus. Unadjusted growth was even weaker at 1.9% y/y from 13.2% y/y last month. M/M swda growth estimated at a shocking -2.6%, though one has to note that last month's reading was distorted by the leap year effect and statistical methods for correcting for this distortion are not robust enough, given the general data volatility and lack of observations."

“We maintain that trend growth for the Hungarian industry should be around 5% this year, Feb overshot that level, Mar brought some correction on the downside. The same volatility was seen in the case of the Polish data for Feb/Mar, suggesting statistical effects are largely to be blamed."

Eszter Gárgyán, Citibank, Budapest

“We expect industrial exports to slow in the second half of this year as activity in Hungary's main export partners in the eurozone decelerates, as demonstrated by the drop in the latest business indicators and retail sales data in the eurozone."

“Therefore, we expect decelerating industrial performance to limit the improvement in the trade balance and slow the economic recovery in the second half of this year, thus GDP growth is likely to remain below 2% in 2008."

“As the MPC noted in the April statement, the disinflationary effects of the negative output gap on a wide range of goods and services has not been confirmed by the inflation data so far. Therefore, our view is that the MPC will maintain its hawkish stance despite the disappointing growth outlook and continue hiking rates if the inflation outlook is above the 3% target on a 5-8 quarter policy horizon."

“We expect the NBH's May Inflation Report to forecast that the headline inflation will only decline to the 3% target by the end of the 3Q09-2Q10 target horizon with significant upside risks."

Hungary External Trade February 2008 (Updated on Revised Data)

Well, Hungary's external trade balance continues to improve. according to the latest (provisional) data from the Hungarian Statistics Office (KSH) in February 2008 Hungarian exports amounted to HUF 1,612 billion (up 21% y-o-y), while the value of imports was HUF 1,571 billion (uo 17% y-o-y. The euro value of exports rose by 18%, while that of imports increased by 14% over the equivalent month of the preceding year.



In February 2008 the trade balance had a surplus of HUF 41 billion (EUR 149 million). The balance improved by HUF 54 billion (EUR 200 million) compared to the same month of 2007. The surplus compares with a deficit of EUR 79.5 million in January this year and a gap of EUR 50.8 m in 2007. As Portfolio Hungary wrly observes "It has not happened since 'time immemorial' that the 12-month trailing balance showed a surplus (EUR 32 m now)".

The steady and constant improvement in the external position can be clearly seen in the trade balance chart.



KSH also reported that Hungary sent 77% of its exports to the European Union and imported 68% of its goods from the EU in February.


Updated Tuesday May 6 2008


Hungary trade surplus in February was EUR 157 million, revised up from the preliminary EUR 149.3 m (see above), according to the Central Statistics Office (KSH) today. The 20% jump in Hungary's export volume does not reveal any impact at that point from the slowdown in the EU business sector, however the improved performance is largely attributable to a sharp increase in sales in Russia.


Exports in February totalled EUR 6,205 m, up 18% year on year, while imports totalled EUR 6,048 m , up 14% from the same month of 2007.

This improved export performance was to some extent attributable to strong growth in foreign sales in several product groups. The export volume of machinery and transport equipment jumped by 26% year on year in Jan-Feb. The engine behind growth - based on forint data at current prices - was telecommunications equipment, with 52% export and 63% import growth in annual terms. The export of mobile handsets doubled and their import grew 2.5 times year on year. The key market for mobile handsets remained Russia where exports were more than three times as large as in Jan-Feb last year. Some 13% of exports went to Russia, while more than 50% of the increased imports came from China.


While growth dynamics are the highest in machinery at transport equipment, this would not explain the surplus, since import growth is still larger than export growth in this sector. On the other hand, the increase in exports at manufactured goods was much larger than that of imports (12% and 7%, respectively). Looking at forint data at current prices, the sale of medical and pharmaceutical products grew by 30%, more than the overall export average. Exports of rubber manufactures leaped by 60% year on year. The substantial increase in foreign drug sales can be attributed to an over 60% rise in this product category going to Russia.