Three bits of data, ranging from mixed to bad

HUNGARY - In Brief 05 Jul 2022 by Istvan Racz

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The following note is about new fiscal, merchandise trade and average exchange rate data. All of this appears important background information now, as EURHUF has just moved to 405, a new all-time record, despite the recent MNB action. 1. General government deficit for Q1: 4.8% of GDP, down from 6.2% in Q1 last year and 6.8% in full-year 2021. This looks great indeed, but not everything is what it looks at first glance. As first thing, the Statistical Office calculates the deficit ratio against seasonally adjusted quarterly GDP, and this method is quite beneficial in first quarters, when GDP is actually quite low. In unadjusted terms, the ratios would be 5.4% of GDP in Q1 and 7% in Q1 last year. But more importantly, there was some backward accounting of the HUF622bn income tax refund of this February in this piece of statistics: it was moved back to 2021, as if tax advances had not been collected last year and returned to taxpayers early this year. This is all standard Eurostat methodology and is wholly regular, yet it is quite far from ideal for meaningful economic analysis. Moving back the tax refund to Q1 2022, where it actually belongs, would result in a Q1 deficit ratio of 10.1% of GDP, once again on unadjusted basis. True, in this case the full-year 2021 deficit would have been only 5.6% of GDP. 2. Merchandise trade deficit for April: HUF196bn or an annualised 3.8% of GDP, after a monthly surplus of HUF120bn or 2.8% of GDP. The volume of exports fell by 1.7% yoy, whereas import volumes rose by 0.9% yoy. This was better than March, the first full month of the war, but still reflected a somewhat depressed trade picture. In HUF terms, export prices were up 18.7% yoy...