A new report on the balance of payments shows positive developments in the Hungarian economy.
By Gabriella Kopházi-Tóth, Senior Relationship Manager, GSS Hungary
The Central Bank of Hungary published a report on the balance of payments that provided deep economic insight. Positive developments, particularly the decline in the external debt of the government and in the share of foreign currency within the government debt, had contributed to the recent upgrades of Hungary’s rating.
The latest report, issued in January, presented declining external debt and subsequently retreating external vulnerability. The current account surplus exceeded 4% of GDP, while net lending was close to 8%. The trade surplus reached historic heights.
On the financing side, parallel to the significant net FDI inflows, the decline in the external debt resulting from transactions exceeded EUR 3 billion in the third quarter.
Net external debt fell to nearly 20% of GDP, while gross external debt dropped by more than 3% to 69%. As a result of the rise in tax revenues due to rising employment and wages, the government’s net borrowing fell to nearly zero. Households continued to increase their savings in government securities, which in turn supports the decrease of the government’s external debt.
Being aware of the importance of monitoring and analysing the balance of payments, through which economic problems can be identified in a timely manner or even avoided and having an understanding of how closely market participants and analysts monitor the developments in the external balance position of the country, the Central Bank of Hungary regularly performs comprehensive analyses of the trends relating to Hungary’s external balance, examines the macroeconomic imbalances and identifies elements and processes which are of critical importance to the vulnerability of the country.
Senior Relationship Manager