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Analysts attribute May export rise to replenishing stocks

Rise in May imports recorded in Hungary stemmed from a replenishing of stocks and continued increase in industrial output, analysts told MTI, cautioning, however, that a potential drop in demand from the country's main export partners poses a risk to further export growth.

The Central Statistic Office reported on Friday morning that Hungary had a €429 million trade surplus in May, down from a €505 million surplus in April, though up from a €424 million surplus in May 2009. May exports were up 22.7% in twelve months at €5.692 billion while imports rose 24.9% yr/yr to €5.264 billion in the period. January-May exports rose 19.0% to €27.527 billion, while imports rose 16.3% to 25.276 billion.

Gergely Suppán of Takarékbank predicted that both imports and exports would continue rising throughout the rest of the year, adding that the pace of export growth would depend on the pace of economic growth in Hungary's main European export markets. Suppán remarked that foreign trade has been expanding throughout the world, much of which stems from the replenishing of supply stocks.

The Takarékbank analyst cautioned, however, that many uncertain factors such as changes in domestic consumption and import demand and the effect of economic austerity measures in European Union member states will exert an impact on Hungary's exports in the future.

Zoltán Török of Raiffeisen Bank expected a slightly bigger surplus of over €500 million for May. He was not surprised by the export growth, though found the import growth figure more interesting, because he does not think such an increase in imports is justified on the basis of domestic consumption or investments. Török said retail trade turnover, consumption and investments are still stagnating, adding that these can be expected to start growing next year.

However, Gergely Suppán said domestic consumption could start picking up already in the second half of 2010 noting that the stabilization or slight improvement of the labor market will positively influence domestic consumption.

With regard to export growth, Suppán said it is also influenced by the positive industrial output figures seen in recent months.

Both analysts attributed the latest rise in import growth to the filling of production-related inventories, which will generate an export surplus in later months.

Török said he did not expect to see a sustained turnaround in foreign trade, remarking that exports will probably grow faster again than imports. Export growth will slow, however, partly due to better base figures, and partly because import demand from Western Europe will decline due to a slowdown in growth.

Suppán predicted a foreign trade surplus of around €5 billion this year compared to almost €4 billion last year, deeming positive the fact that the surplus of the first five months is significantly bigger than that recorded in the same period of last year. (MTI-ECONEWS)