Budapest, 9 July 2021 – In 2021 Q1, Hungary’s current account showed a moderate surplus and net lending also continued to rise, surpassing 2 per cent of GDP. Hungary’s net external debt was low, at 8.6 per cent of GDP. The level of international reserves steadily and significantly exceeds the level of short-term external debt.

At the beginning of 2021, the Hungarian economy's four-quarter current account surplus and net lending rose to 0.2 per cent and 2.1 per cent of GDP, respectively. The improvement in external balance indicators is mainly attributable to an increase in the surplus on the goods balance, which – among other things – was driven by rising exports in line with the pick-up in external demand and industrial production, as well as by developments in the terms of trade. In parallel with rising export revenues, the profits of foreign-owned enterprises also increased, which was reflected in a moderately larger income balance deficit. The steadily high drawdown of EU funds improved the external balance of the economy via the transfer balance.

According to financing side data, in 2021 Q1 the net external debt ratio was 8.6 per cent of GDP, in conjunction with rising Hungarian direct investments abroad. In March 2021, Hungary’s international reserves amounted to EUR 32 billion, thus still exceeding the level expected and deemed safe by investors by more than EUR 10 billion.

The increase in net lending is mainly linked to the growing financial savings of the private sector, while the general government deficit rose further in conjunction with the measures taken to contain the pandemic, the economy protection measures and lower tax revenues. Within household savings, the volume of government bond purchases was once again significant, which continues to be a favourable trend in terms of external vulnerability.