26 January 2024
In 2023 Q3, the external position of the Hungarian economy continued to improve, with the current account showing a quarterly surplus of 0.8 percent, due mainly to an improvement in Hungary’s terms of trade and the adjustment in domestic demand. Both the net and gross external debt ratios decreased significantly. International reserves remained at historically high levels.
In 2023 Q3, the seasonally adjusted quarterly current account surplus, which reflects short-term trends, amounted to 0.8 percent of GDP. The improvement in external balance indicators was mainly due to the consistently high trade surplus, which, similar to the previous quarter, registered a surplus of more than EUR 3.3 billion. The considerable year-on-year improvement mainly reflected a decline in energy prices during the year and the import-constraining effect of subdued domestic demand.
The decline in net borrowing took place against the backdrop of the private sector’s improving financial position, while the general government deficit decreased somewhat. The combined increase in net lending of households and the corporate sector mainly reflects the adjustment in consumption and investment. The four-quarter general government deficit narrowed slightly but remained at a historically high level.
The outflow of debt liabilities and the positive impact of revaluation effects were reflected, overall, in a sharp decline in external debt ratios. At the end of September, net external debt dropped to 11.9 percent of GDP, while gross external debt stood at 64.4 percent of GDP. International reserves amounted to around EUR 40 billion at the end of the third quarter, exceeding the level of short-term external debt, an indicator closely monitored by investors, to a much greater extent than in previous quarters, by almost EUR 6 billion.