External trade surplus halves to EUR244.8m in Hungary

The external trade surplus amounted to EUR244.8m and narrowed by 49.3% y/y in April, the statistical office (KSH) published detailed trade figures. The surplus was revised slightly up from the preliminary figures released earlier. The deterioration in y/y terms was on account of some weakness in export activity and terms of trade worsened by 0.4% y/y as well. On a cumulative basis, the external trade surplus reached EUR2,097.7m and fell by 20.2% y/y in Jan-Apr on the back of strong domestic demand and unfavourable terms of trade developments.

In nominal terms, export growth slowed down to 3.8% y/y in April. Real export growth moderated as well to 3.2% y/y during the month. As we suspected, the unfavourable export performance was rather due to calendar effects related to the Easter holiday timing this year. In calendar-adjusted terms, real export growth recovered visibly to 5.1% y/y in April and seemed generally in line with the average increase since the start of the year. Accordingly, we do not yet view the export data as a signal for increasing impact from the eurozone economic slowdown.

The data suggested that export growth was supported to a significant extent by stronger demand from non-EU countries, in our view. Energy exports also appeared quite high but energy trade is usually quite volatile and cannot sustainably support the export performance, in our view. Exports of machinery and transport equipment slowed down to a real 3.2% y/y growth in April. The slowdown was marginal so we think it mainly reflected the calendar effects and the domestic car industry continued to boost export growth during the month.

Real import growth picked up in both non-adjusted and calendar-adjusted terms in April. The import figures testified to the continued strength of domestic demand, in our view. Calendar-adjusted imports were up by 7.8% y/y and we think they showed a relatively flat trend in the past year or so with the April print being in the upper band around that trend. Import growth was on account of particularly strong energy and food imports.

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