First time the BOP is indeed improving: a quick look at the preliminary May data

HUNGARY - In Brief 18 Jul 2023 by Istvan Racz

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The following table gives you the key elements of the BOP for January-May, as % of GDP (sources: MNB, KSH): Clearly, there were improvements on all of the trade balance, the current account balance, the net financing requirement and the basic balance, despite the deterioration reported on net factor income (interest and earnings on FDI), net capital transfers (development grants from the EU) and the errors and omissions gap. The prices of imported energy are now really low, imports are also held back by weak domestic demand, the industrial sector is selling more cars and batteries for cars abroad, despite its overall weak performance, and there is significant improvement in the export of services, especially in the non-travel section. This was the first time we INDEED saw an improvement on the BOP, despite the MNB, the government and all sorts of analysts have been talking about an improving trend for several months already, first at the level of hope, then derived from the logic of macroeconomics, then based on initial signs, and then finally on the grounds of ignoring parts of the BOP dataset that were actually deteriorating. Really good news!