Budapest, 20 July 2022 – The balance of the current account decreased further at the beginning of 2022, primarily due to external factors, with significant domestic absorption also among the contributing factors. In March 2022, the net external debt ratio of the economy increased slightly to 8.6 percent. International reserves continue to significantly exceed short-term external debt.
In 2022 Q1, Hungary’s four-quarter current account deficit and the net borrowing of the economy amounted to 4.8 percent and 1.6 percent of GDP, respectively. The decline in external balance indicators, which is similar to that observed in the countries of the region, is mainly attributable to the decrease in the balance of goods, as a result of the surge in energy prices. At the same time, the strong expansion in consumption due to high income outflows as well as corporate accumulation also contributed to the decline in the indicators. Nevertheless, a gradual improvement in the balance of services, the declining income balance deficit and the increasing absorption of EU transfers improved the external balance position of the economy.
The higher net borrowing is mainly attributable to the increase in corporate net borrowing, which is related to a rise in investment and inventory accumulation, as well as to higher energy prices. The general government deficit fell as a result of an expansion in tax revenues, in view of the economic upswing.
In 2022 Q1, net borrowing was primarily financed by inflows of debt liabilities. At the same time, as a result of revaluation and robust expansion in nominal GDP, external debt ratios increased only slightly, with the net indicator amounting to 8.6 percent in March 2022. At EUR 37 billion, international reserves continue to significantly exceed the level of short-term external debt, which is monitored closely by investors.