Revised figures out for Q1; the cumulative BOP picture looks better

HUNGARY - In Brief 27 Jun 2023 by Istvan Racz

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The difference between preliminary and final (revised) BOP data tends to be significant, the main difference being that in the final (quarterly) data, much of the (normally big) errors and omissions balance (deficit) gets distributed between various parts of the BOP. And so it happened this time as well: the current account balance was reported as slightly worse than the preliminary number, whereas a lot of the preliminary E&O gap was identified as financial account items, leaving mainly for other investments. The result for January-April (final Q1 added to April preliminary for 2023) can be summarised as follows, data given as % of GDP, the sources being MNB and KSH (the latter for GDP, of course): Compared to the same period of last year, the trade balance improved a lot, the NFI balance deteriorated, because of higher debt/FDI cost, the C/A deficit shrank spectacularly as a result, but most of that improvement was offset by much weaker net capital transfers (EU!). The E&O balance still has a significantly negative trend - it is more or less always a marked deficit, rather than oscillating around zero - and net FDI has a seasonal pattern, being normally negative at this time of the year (financial reporting season). In terms of the basic balance, there seems to be marginal improvement. So, yes, the change is positive overall, but looking at the C/A balance only and claiming a big victory would be an exaggeration, even though it appears to be a fashionable practice, among official and private sector analysts alike.