MNB augurs improvement in external balance indicators from 2023

MNB

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The National Bank of Hungary (MNB) attributed a continuing decline in Hungary's external balance indicators to a worsening trade balance but pointed to an improvement from 2023 in a balance of payments, state news wire MTI writes citing a central bank report released this week.

MNB noted that Hungary's current-account deficit was the equivalent of 4.8% of GDP in the four quarters ending in Q1 2022.

It said developments in the country's balance indicators were "primarily" driven by the continued decline in the trade balance. 

Exports are still restrained by the global shortage of semiconductors, the war between Russia and Ukraine, supply chain disruptions, and weakening external demand, while the deterioration in terms of trade due to the surge in energy prices as well as strong domestic demand support an increase in imports, MNB said.

A decline in foreign-owned companies' profits and the increase in the absorption of European Union transfers has cushioned the impact of those factors on the external balance indicators, it added.

"Hungary's external balance will improve from 2023, as external factors normalize, geopolitical tensions ease, and the export-increasing effect of the implemented investment projects comes to the fore," the central bank said.

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