Hungary's foreign trade surplus shrinks slowly but surely

Let’s start by stating that in euro terms exports decreased by 3.8% year on year in March, and the Central Statistical Office (KSH) recorded a 1.1% drop at imports. The thing is, however, that the same month of 2017, i.e. the basis for the comparison, shows extremely high foreign trade numbers. If we do not compare the latest numbers to that and look at them separately, we have no reason to complain, as both export and import figures are high. Actually, this was the second time in Hungary’s history that the value of exports exceeded EUR 9 billion. Even if we adjust the data for seasonal factors it is clear that the ascending trend is not broken.

The above charts also show that the trend of imports is slightly accelerating while exports show a more balanced trend. This explains why Hungary’s foreign trade surplus has been decreasing slowly but surely. The cumulated balance of the first quarter shows the smallest surplus of the last four years. The cause of that is that domestic absorption exceeds GDP growth. To put it in more practical terms, the rapid growth in consumption and investments is driving the country’s import demand higher.

We see a similar picture if we examine the monthly trends of the foreign trade balance. The trend had turned around in early 2016 and has been showing a descending trend ever since. The phenomenon is not worrisome, though, given that the surplus remains gigantic, and even if the rate of the decrease stays constant, there will still be surplus in the trade balance for a long, long time.

Front page photo by Shutterstock

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