Hungary's trade surplus ballooned to €978mn in February, statistics office KSH confirmed on May 3, revising its first estimate by €1mn. The surplus is the second-highest on record.
The massive gap is €448mn higher than January's, and €111mn above that seen in February 2015. Strong exports helped Hungary's surplus expand 29% across last year, to reach a record 12 month high of €8.1bn. The continued positive trade balance is helping the government's efforts to reduce Hungary's vulnerability to external shocks, however, it will only likely add to the appreciation pressures on the forint, which the central bank is struggling to diffuse.
Ongoing consumer demand appears to have overpowered persistently low oil prices somewhat, pushing imports 7.4% y/y higher. Export growth increased 8% y/y in February. Favourable export dynamics suggest that recently feeble industrial production may turn around in the coming months.
The rising forint has been a significant factor in pushing the Magyar Nemzeti Bank (MNB) back to conventional monetary policy easing. Hungarian rate setters moved to lower the benchmark by 15 bp to 1.05% on April 26, which was the second 15bp easing by the MNB. Rate setters frankly stated that more is on the way.