Economy 10 May 2013, 9:00am

Hungary posts EUR 753 m trade surplus in March, exports & imports drop

Portfolio

Hungary posted EUR 753.4 million trade surplus in March, according to first estimate figures published by the Central Statistics Office (KSH) on Friday. Both exports and imports declined in annual terms.

The EUR 753.4 m March surplus compares with a surplus of EUR 588.9 m in the third month of 2012. The latest figure is also bigger than the surpluses posted in the preceding five months.

Exports totalled EUR 6.87 bn, down 2.8% yr/yr, whereas imports amounted to EUR 6.11 bn, a 5.6% decrease in annual terms.

The Q1 trade balance shows a EUR 1.71 bn surplus, higher than the base period’s EUR 1.69 bn.

In the first quarter exports dropped by 0.1% yr/yr to EUR 19.89 bn and imports shrunk by 0.2% compared to Q1 2012 to EUR 18.18 bn.

The substantial surplus booked in March is formally the result of the fact that the gap between export growth and import growth is a positive number again.

The positive change in the export-import gap, however, did not come about because exports revved up so much, given that imports dropped more (-5.6%) than exports (-2.8%) on an annual basis. Looking at Hungary’s export performance a little more closely we can state that there is no sign of an expected pickup. The stagnation of exports that has been on for 18 months now continued also in March.

In view of the January-February data one could still hope that the adjustment process in the Hungarian economy will abate, giving a chance for economic upturn. Seeing the correction in March, however, we see yet another shadow cast on the growth outlook. In our estimate, exports were up 1.5% q/q, according to seasonally-adjusted figures and imports grew by 2% compared to Q4 2012.

This does not gainsay the expectation that the Hungarian economy could have emerged from recession in the first quarter (i.e. GDP will up in quarterly terms). At the same time, the March figures have increased chances that the economic performance improved in Q1 primarily as a result of a technical correction, i.e. the chief cause was the disappearance of negative shocks at the end of last year. Should this assumption prove correct then the full-year growth outlook turns worse.

Needless to say, a single month’s data is not enough to draw final conclusions. Q1 GDP numbers will be published next weak (raw estimate) and the detailed trade figures to be released three weeks from now may give us a clearer picture of the production trend of different sectors and of how orders turned out.