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Sustained trade surplus and decreasing external vulnerability


Budapest, 4 January 2018 – Hungary's net lending exceeded 5 per cent of GDP in the third quarter of 2017. While the recovery in domestic demand lowered the current account surplus, net lending fell only moderately as the absorption of EU transfers increased. Due to the favourable net lending, Hungary's external vulnerability and external debt indicators continued to decline, with gross and net external debt falling to 64 per cent and 14 per cent of GDP, respectively. The current account balance of the Hungarian economy still substantially exceeds the values observed in the countries of the region.

The savings of the Hungarian economy were outstanding in the third quarter of 2017 as well. With net lending above 5 per cent of GDP, Hungary's external debt continued to decrease, which improved the economy’s external vulnerability. In addition to high household savings, the consistently high level of net lending is attributable to the moderate fiscal deficit.

As a result of strong growth in domestic demand, and particularly in investments, the size of the trade surplus decreased, but it still exceeds the level typical of the post-crisis period. Despite the decline in the external position, both the economy's net lending and the current account surplus are considerably higher than the values observed in the countries of the region.

In terms of financing, net external debt continued to fall, while net FDI inflow amounted to more than EUR 0.7 billion. The decline in the economy’s net external debt is partly attributable to deleveraging by the private sector and partly to an increase in its external assets. As a result of the favourable net lending, external debt indicators continued to decrease, as Hungary's gross and net external debt fell to 64 per cent and 14 per cent of GDP, respectively. Short-term external debt, which is of key importance in the context of external vulnerability, fell to EUR 18.7 billion, and thus the volume of foreign exchange reserves still substantially exceeds the level expected and deemed safe by investors.

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