Hungarian c-bank sees lower dependency of domestic economy on foreign funding

By bne IntelliNews April 4, 2014

Hungary’s external balance has improved considerably in recent years and the dependence of the economy on foreign financing sources has diminished, the central bank said in the first edition of a report on developments in the country's external balance position.

Hungary’s net lending (net financial savings) has improved considerably due to surpluses on the current and capital accounts. Domestic absorption, which declined due to deteriorating income trends and limited borrowing options, improved the trade balance, while declining profitability rates in the corporate sector had an upward effect on the income balance, and the rising use of EU transfers improved the balance of transfers to a considerable degree.

Hungary has made substantial payments on its external debt in the years following the crisis, while at the same time foreign direct investment continued to flow into the economy.

According to the report, Hungary’s external indebtedness has also moderated as the net external debt has been gradually decreasing in recent years. In particular, the decrease in the net external debt of the state - the banking and the corporate sectors in Q4 2013 pushed the net external debt down to 35% of GDP, which is significantly lower than both pre-crisis levels and the all-time high of more than 60% registered in early 2009.

In terms of sector distribution, the increase in net lending has been contributed by the net savings of the household and corporate sectors, as well as by the tight spending control of the general government.

In regional comparison, the central bank concluded that despite the favourable trends, Hungary’s external indebtedness continues to exceed the regional average, which warrants the continued close monitoring of developments in the external balance

The bank said it has launched a new publication series with the aim of providing regular and comprehensive analyses of developments in the country’s external balance position, macroeconomic relationships and to identify factors critical in terms of the country’s vulnerability.

Related Articles

Poland isolated again as it threatens to block EU declaration

Poland will not sign the Rome Declaration if its demands for moulding the EU’s future are not reflected in the document, Prime Minister Beata Szydlo threatened on March 23. The statement could ... more

Hungarian referendum on nuclear deal with Russia rejected

The expansion of the Paks nuclear power plant will be Hungary's “biggest political error of the 21st century” claimed Bernadett Szel, leader of the small opposition party LMP, on March 22, as she ... more

Hungary finally joins the negative yield club

Hungary finally joined the negative yield club on March 21 as Government Debt Management Agency AKK  accepted a bid of -0.01% at an auction of 3-month T-bills. Hungarian yields have been on ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss