Hungarian August Trade Deficit Narrows; Industrial Output Grows

Oct 9, 2007 - The Hungarian trade deficit narrowed to EUR211.1 million in August from EUR348.6 million deficit registered last year, the statistical office said Tuesday. Economists expected a trade deficit of EUR167.0 million for the month of August. The value of exports amounted to EUR5.34 billion in August, while imports totaled EUR5.56 billion.

During the eight months ended August, the trade deficit was EUR830.6 million versus EUR1.946 billion deficit reported over the same period last year. The value of exports stood at EUR43.81 billion and imports were valued at EUR44.65 billion.

Hungarian industrial output increased 9.5% year-on-year in August, the Statistical Office said Tuesday. Meanwhile, the industrial output index adjusted by working days rose 12.2% in August from the previous year. Economists expected an annual increase of 10.3% for the month of August.

The report stated that the volume of industrial output climbed 0.9% in August from the previous month, on a seasonally and by working-day adjusted basis.

During the eight months ended August, the volume of industrial production improved 9.0% over the same period last year.

Hungary central bank cuts leading interest rate 0.25 pct point to 7.5 pct

Sep 24, 2007 - The Hungarian central bank today lowered its key interest rate by a quarter of a percentage point to 7.50 pct, the bank's rate-setting Monetary Council said in a statement.

The rate cut had been widely expected by analysts, who say inflation in Hungary is now on a downward path.

According to the latest consumer price data published by the central statistics bureau KSH earlier this month, the annual rate of inflation in Hungary stood at 8.3 pct in August, fractionally lower than the 8.4 pct recorded in July.

In the period from January to August, the 12-month rate of inflation averaged 8.5 pct.

Hungary's high inflation rate partially reflects big cuts in state subsidies for household energy, which were implemented to rein in the public deficit, which at 9.2 pct of gross domestic product is the highest in the European Union.

The Hungarian central bank forecasts the annual rate of inflation to average 7.6 pct in 2007. Inflation is then expected to slow sharply to 4.5 pct in 2008.

The central bank had already cut its key interest rates by a quarter-point to 7.75 pct in June. Prior to that, the interest rate had been held at 8.0 pct since October of 2006.

Hungarian Trade Deficit Narrows In July

Sep 7, 2007 - The Hungarian trade deficit narrowed to 165.0 million euros in July, the statistical office said Friday. A year ago, the trade deficit amounted to 369.7 million euros. Exports grew around 22% from the previous year and imports climbed nearly 17% in July.

During January to July, exports amounted to 38.44 billion euros and imports totaled 39.08 billion euros, resulting in a shortfall of 639.2 million euros.

The report noted that the share of EU member states in July was 80% in exports and 70% in imports.

Hungarian Annual Economic Growth Rev. Down To 1.2%

Sep 7, 2007 - The Hungarian annual economic growth was revised down to 1.2% in the second quarter, a report from the statistical office showed Friday. The growth number was revised down from the initial estimate of 1.4%. The economic growth slowed from the 2.7% recorded in the first quarter. The sequential growth eased to 0.1% from 0.3% registered in the prior quarter.

The GDP growth in the second quarter was led by industrial output growth. Meanwhile, the household final consumption dropped 3.4%. During the first half of the year, the economy expanded 1.9%.

Hungarian Q2 Investment Volumes Drop

Aug 31, 2007 - Investments in Hungary slipped 0.4% on a yearly basis, in the second quarter, the Hungarian statistical office, said Friday. Investments edged up a seasonally adjusted 0.1% on a sequential basis. The value of investments in the second quarter came in at 1025.8 billion forints.

In the second quarter, the volume of construction investments fell 8.2% on an annual basis, while investments in machines and equipment climbed 11.6%. Investments in manufacturing soared 26.4%, boosted by investments in manufacture of rubber and rubber products, electrical and optical equipment and transport equipment.

Investment volumes in the real estate, renting and business activities segments grew 6.9%, while investments in wholesale and retail trade advanced 3.3%. In comparison, the volume of investments in compulsory social security plunged 48.1%, owing to high base level in the previous year, the statistics office, observed. Investments in transport, storage and communications segment declined 8.5%, while investments in other community, social and personal service activities slumped 17.7% and electricity, gas and water supply eased 16.7%.

The value of investments in the first half of the year grew 0.2% annually to 1857.0 billion forints.

Hungarian Trade Deficit Narrows To Rev. EUR39.0 Mln In June

Aug 31, 2007 - The Hungarian trade deficit narrowed to 39.0 million euros in June from a shortfall of 51.3 million euros in the prior month, a final report from the statistical office showed Friday. The trade deficit for June was revised from 41 million euros estimated earlier.

The trade deficit totaled 474.1 million euros during January to June, revised down from 507.4 million euros initially estimated. Exports grew 17%, while imports increased 14%.

Hungary keeps rates on hold at 7.75%

Aug 27, 2007 - Hungary's central bank kept its benchmark policy rate unchanged at 7.75% Monday, choosing caution in the face of ongoing worries about trouble in global credit markets.

The bank last cut its key policy rate by 25 basis points in June.

"We did not expect the bank to lower the rate at today's meeting, though we do expect at least one further quarter-point cut this year, enabled by slowing consumer-price growth, negative month-ago wage data and very unimpressive second-quarter GDP growth," said Zoltan Pozsar, analyst at Moody's Economy.com, in a research report.

Hungary's central bank revised its GDP growth forecast to 2% year on year in 2007 from 2.5% previously and hiked its inflation forecast to 4.5% year on year in 2007 from 3.6%.

"The greater than expected slowdown in economic growth and the strong disinflationary effect of the fall in demand continue to represent downside risks," the central bank's monetary council said in a statement Monday.

"The financial market turbulence stemming from the problems in the U.S. subprime mortgage market has contributed significantly to uncertainty in the global investment environment, leading to a rise in the required risk premium on forint assets," the statement said.

Many emerging-market assets, including currencies such as the Hungarian forint, tend to suffer in periods of global risk aversion, as investors slash exposure to risky assets to cover losses elsewhere. Hungary is particularly vulnerable to sudden shifts in global risk appetite, since foreigners hold 30% of local government debt.

"It is rather paradoxical that the Hungarian government failed for years to do something about the large imbalances in the economy, and that the markets more less ignored this because of the benign global financial climate, while the forint has recently come under pressure on the back of worsening global credit conditions and despite the Hungarian government tightening fiscal policy last year," wrote Lars Christensen, senior analyst at Denmark's Danske Bank, in a research note.

As a result, monetary policy might now have to remain tighter because fiscal policy was not tightened when global financial conditions were more supportive, Christensen said.

Pozsar of Moody's Economy.com added: "Skittishness in global markets might preclude cuts that are warranted by fundamentals. Lower interest rates, and thus lower borrowing costs, come as a strong relief to the Hungarian economy, which is suffering from very tight fiscal policy."