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Hungary savings ratio reaches four-year peak at 3.4% of GDP in 2009

The net financing capacity of households, or net household financial savings reached HUF 877 billion or 3.4% of GDP in 2009, the highest ratio since 4.3% in 2005 and a jump from a mere 1.2% in 2008, figures published by the National Bank of Hungary (MNB) on Thursday reveal. The improvement clearly reflected the recession: households saved just half of what had saved in 2008, but net savings still more than doubled as households were net loan re-payers for the first time since 1991.

The MNB noted that transfers made from private pension funds on behalf of those opting to return to the state pension system reduced last year's net savings by HUF 42 billion or by 0.16% of GDP (and improved the general government's financing position by a similar amount).

The MNB revised the 2009 figures up from a preliminary HUF 835 billion or 3.2% of GDP reported on February 16.

The savings ratio jumped from 1.2% in 2008 as the financial crisis encouraged the propensity to save while making people less willing to borrow and banks less willing to lend. The net financial savings ratio bottomed out at 0.1% in 2003, rose to 4.3% of GDP in 2005, and fell each year until 2008 before rising in 2009.

Gross saving totaled HUF 781 billion in 2009, dropped sharply from HUF 1,651 billion in 2008 as the crisis raised unemployment and reduced resources to save.

And households repaid net HUF 96 billion in loans last year which saw two quarters with net repayments. The last time households repaid more loans than they borrowed was Q1 2000, and last such year was 1991, the MNB figures show.

In Q4 2009 alone, net savings totaled HUF 451 billion or 6.3% of the quarter's GDP, the bank said, revising the figures up sharply from HUF 421 billion and 5.9% in the preliminary report., and up sharply from 1.6% in Q3 . The Q4 ratio was boosted, however, to a large part by seasonal factors as savings tend to be high in the last quarters.

Calculated on a seasonally-adjusted basis, the Q4 net savings ratio was 3.1% of the respective GDP, down from 3.6% in Q3, and only slightly up from 3.0% in Q2, the lowest adjusted ratio last year. The seasonally adjusted ratio jumped from 0.2% of GDP in Q3 2008 to 3.9% in Q4 2008 and peaked at 4.0% in the first quarter of 2009.

Households saved gross HUF 487 billion and borrowed HUF 36.3 billion in Q4, the MNB figures show.

In the usual seasonal pattern, Q4 gross savings were well above the amount saved in the preceding three quarters, but still dropped almost 40% from the already subdued HUF 788 billion saved in Q4 2008. Most of the new savings in the quarter went into forint deposits (new deposits of HUF 161 billion), into investment fund shares (HUF 156 billion) and in insurance reserves (HUF 135 billion).

Gross borrowing was moderate compared to previous Q4s and came after HUF 60 billion gross repayments in Q3. Among liabilities, forint loans rose a moderate HUF 17 billion and foreign currency denominated loans fell HUF 67 billion.

A slight weakening of the forint added HUF 6 billion to the forint value of households' foreign currency deposits and raised the stock of their foreign currency loans by HUF 101 billion. (MTI-Econews)