Sudden break in Hungary's foreign trade - What has happened?

According to preliminary data published by the Central Statistical Office (KSH) on Thursday, Hungary’s exports decreased by 1.6% year on year in euro terms in April, after a 18.4% jump in March and imports shrank by 0.4% after a leap of 21% in March. This is quite a break in the ascending trend that had started in the winter, as attested by the charts below.

The difference between the change in exports and imports shows that the gap slipped into negative territory. This suggests strong investment and consumption-focused import demand, in relation to which we have already seen signs over the last few months (although retail sales data in April turned out surprisingly feeble even when adjusted for the Easter impact).

The value of exports decresed to EUR 7.8 billion in April from EUR 9.4 bn in March, and imports fell to EUR 6.9 bn from EUR 8.5 bn. Yet the trade surplus is still very high at EUR 878 million, down from EUR 956 mn in March. The January-April balance remains just under EUR 10 bn, although the era of fascinating growth dynamics is probably over.

The impact of the two Easter holidays tells us that the nasty decrease in April was just a one-off drama. This is also underpinned by the fact that Hungary’s manufacturing purchasing manager index jumped to an extraordinary height of 62.1 points in May and - as the chart below attests - this index moves relatively in tandem with the export index. This means we still have reason to be upbeat about the country’s foreign trade processes.

• Tags:
• export,
• import,
• economy,
• foreign trade