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Current account deficit widens to €1.838 bln in Q2 from Q1

  Hungary’s preliminary current-account deficit was €1.838 billion in Q2, widening from €1.647 billion in Q1 2008, the MNB announced on Tuesday.


The Q2 c/a deficit was bigger than the €1.420 billion deficit in Q4 2007, but smaller than the €1.969 billion deficit in Q2 2007. The seasonally-adjusted net financing requirement was €1.192 billion in Q2, up from €1.137 billion in Q1, but lower than in any figure in 2007 (Q1: €1,448; Q2: €1.372; Q3: €1.261 and Q4: €1.207).

The seasonally-adjusted c/a deficit was €1.617 billion in Q2, slightly lower than the Ft 1.698 billion deficit in Q1 and in the range of the quarterly deficits recorded in 2007: between €1.528 billion (in Q1) and €1.735 billion (in Q2).

The seasonally-adjusted trade balance in the c/a shows a €283 million surplus, the fifth surplus in a row. The Q2 surplus was slightly less than the €321 million surplus in Q1, but well over the €32 million surplus in Q2 2007. The seasonally-adjusted services surplus was €228 million, just €1 million more than in Q1, but down from €280 million in Q2 2007 and €277 million in Q3 2007.

Seasonally-adjusted income outflow was €2.193 billion in Q2, exceeding the €2.145 billion in Q1 to reach a new record. Within income outflow, debt-related investment was €753 million in Q2, up from €693 million in Q1 and well over €523 million in Q2 2007. Income outflow on non-debt equity investments was €1.399 billion, the lowest level in the past six quarters.

The unadjusted trade surplus was €287 million in Q2, well below €375 million in Q1 but well over €89 million in Q2 2007. The surplus from services jumped to €301 million in Q2 from €73million in Q1, but was down from €339 million in Q2 2007.

Unadjusted income outflow was €2.426 billion in Q2 and included €784 million in revenue from debt-related investments and €1.597 billion in transfers from income on equity investments. The latter includes estimated profit repatriation and reinvested earnings. Reinvested earnings show an €496 million withdrawal in Q2, as most companies decided on their dividends at general meetings in the spring. Combined with €1.274 billion of reinvested earning in Q1, the H1 figure comes to €779 million, well over first half FDI (foreign direct investment) inflow of €378 million.

Profit repatriation of Hungarian companies from their subsidiaries abroad was €566 million in Q2, €70 million more than profit repatriation of foreign investors in Hungary. In the H1, Hungarian investors ploughed back €288 million into their foreign ventures. Non-debt-generating financing turned negative in Q2, however, not because of profit repatriation, but due to a big €1.123 billion in withdrawals from equity and securities portfolios in Q2. The withdrawals came to €744 million in H1.

In line with regular revision practices, the MNB published Q2 balance of payments data for the first time, together with revised data for Q1 2008, 2006 and 2007. At the same time, new methodology was introduced resulting in significant changes in revised figures.

Data collected from corporate questionnaires for direct investment in 2007 have now been incorporated into balance of payments data for the first time. Estimates for reinvested earnings, published in the statistics for 2007, have been replaced by preliminary data based on these questionnaires. After-tax corporate profits for 2008 continue to be treated as estimates until the receipt of corporate questionnaires to be submitted in June 2009.

Balance of payment statistics published on Tuesday also show the effect of a coordinated revision by the Central Statistics Office and the MNB for goods, services, compensation of employees and current transfers in the national accounts and the balance of payments back to 2004. (MTI-Econews)