Hungary’s trade balance posted a deficit for the seventh consecutive month in January, according to a first reading of data released Friday by the Central Statistical Office (KSH).
Hungary, an export-driven economy where trade surpluses are the norm, recorded a trade deficit of 196 million euros for the month, with exports rising 15.1% year on year to 10.288 billion euros and imports up 31.2% to 10.485 billion.
Analysts said the growth in imports and the weakening of the trade balance were largely due to growing domestic demand and soaring energy prices.
Takarekbank analyst Gergely Suppan said after the trade surplus fell to 1.9 billion euros in 2021, the war in Ukraine further clouded expectations. Rising grain prices, another consequence of the war, could offset the deterioration in the trade balance, but this would be mitigated by grain export ceilings, he said.
Foreign trade could show a deficit this year, which could be compensated by the construction of new capacities in the next few years, he said.
Gábor Regős of Századvég Gazdaságkutató said January’s export growth was in line with improving industrial production figures. Imports rose on the back of growing domestic consumption and rising energy and electricity prices, he said.
To improve Hungary’s trade balance, exports will need to be boosted by investment support as the war disrupts supply chains, Regős said. Another tool would be to support service exports, he said.
Import prices are expected to rise further due to wartime sanctions, he said. At the same time, Russia and Ukraine are not major destinations for Hungarian exports, he said.