External financing capacity improves in Q1 - MNB

Net lending according to the real economy approach rose to 4.7% of GDP in Q1, according to a summary by state news wire MTI. The increase came from the expansion in EU transfers, while the trade surplus declined further, in line with robust expansion in investment, strong consumption dynamics and a slight deterioration in the terms of trade owing to higher oil prices.  

The rate of decline in the goods balance decelerated at the beginning of the year, as a result of the restrained growth in inventories early in the period. The services balance continued to rise, and thus the trade surplus remained high, reaching 7.5% of GDP.

The income balance deficit was unchanged at 5.1% of GDP, while the current account surplus amounted to 3.1% of GDP in Q1, which significantly exceeds the level typical of countries in the region. The surplus of the transfer balance rose to 2.3% of GDP.

The external debt-to-GDP ratio continued to fall. Net external debt amounted to around 11% of GDP, while the gross indicator was close to 59%. Net debt fell 2.2%, and gross debt 1.2%. The general governmentʼs net external debt fell to the greatest extent, but on the whole, every sector contributed to the fall in net external debt.   

Following a sharp decline at the end of last year, short-term external debt rose by EUR 1.5 billion to EUR 18.2 bln, which is primarily attributable to companies and to a lesser extent to the banking sector and general government. FX reserves, at EUR 23 bln, continue to significantly exceed the level expected and considered safe by investors.

Four-quarter net lending according to the financing side increased to 2.7% of GDP in Q1. As a result of an increase in reinvested earnings, net foreign direct investment (FDI) expanded further.

In Q1 the outflow of debt funds declined slightly and banksʼ net external debt declined further, due to an expansion in foreign assets in line with the developments seen in recent years.