Current account deficit remains solid - Hungary

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The current account balance deficit in Q1 2007 is estimated at €1.2 billion ($1.6 billion) on average by market analysts polled by daily Napi Gazdaság.

The latest Reuters consensus was €1.18 billion. The projected deficit, though similar to the previous two quarters’ data, is definitely lower than the actual deficit in Q1 2006, and the expected €4.6 billion ($6.17 billion) annual deficit, 4.5% of GDP, will be the most favorable result since 1997. This is mostly due to the trade of commodities, since export is back on a trajectory of increase, said Raiffeisen analyst Bence Lányi. Service balance has long been positive but flow of incomes remained negative. Also, the extent to which the current account balance is financed from portfolios has been decreasing, which is also a favorable tendency, and this can prevail throughout 2008 as well, if foreign working capital keeps flowing in at the current level of €2.5 billion per year, said János Samu, expert of Concord Fund Management. The money from EU funds will play an important role in financing the current balance in the coming years. (Napi Gazdaság)

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