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Analysts put Q4 c/a deficit at €1.6 billion – paper

Analysts in a poll published in Friday’s issue of business daily Napi Gazdaság estimated Hungary’s current-account deficit reached €1.6 billion in Q4, bringing the full-year deficit to €7.6 billion or 7.2% of GDP.

The National bank of Hungary (MNB) will publish preliminary Q4 c/a data on Tuesday. The analysts’ estimate compares to a €2.5 billion deficit in Q3, a €1.9 billion deficit in Q2 and a €6.07 billion deficit in Q1-Q3.

Export demand for Hungarian goods and services started to fall in Q4, causing demand for import content to drop. Banks’ corporate lending activity fell and households’ propensity to save grew, reducing the external financing requirement in a trend that continued at a faster rate in 2009.

Net household savings jumped to 6.4% of GDP in Q4. Households were net borrowers in Q1-Q3. The analysts forecast a €4.7 billion c/a deficit in 2009, or 4.6% of GDP, and a €4.3 billion deficit in 2010, or 4.0% of GDP.

The forecasts for external financing requirement take into account an expected increase in EU funding of several hundred million euros in each of the coming years. EU funding came to €1.13 billion in 2007 and reached €1 billion in Q1-Q3 2008.

The analysts said Hungary’s trade surplus in services and goods probably turned into a deficit in Q4. Already in Q3, the country ran a deficit in trade of goods after surpluses in the previous five quarters. They put income outflow at around €1.2 billion, the lowest in two years and well under the €2.51 billion and €2.12 billion in Q3 and Q2, respectively.

Low profits and consequently declining profit repatriation and reinvested earnings of foreign-owned companies are seen reducing outflow further this year in spite of increasing debt related payments. (MTI-Econews)