Hungary’s Current Account Deficit Grows to EUR 806 Mn

After a decline in May, the monthly current account deficit in Hungary widened to EUR 806 million in June, the same level as in previous months, according to preliminary data released by the National Bank of Hungary (MNB) on Monday. The current account deficit was EUR 370 million in May and EUR 780 million in April and March.

The capital account asset increased from a modest EUR 35 million in May to EUR 222 million, but this EUR 187 million improvement was not enough to offset a EUR 436 million deterioration in the current account balance.

The external financing needs, calculated from the combined current and capital account balances, accepted as an overall indicator of the country's external financial position, jumped from EUR 108 million in April and EUR 335 million in May to EUR 584 million in June.

The deterioration in the current account was caused by the flow of funds linked to external trade in goods. Export receipts fell by EUR 124 million compared to May, while import outflows rose by EUR 377 million, increasing the deficit by EUR 501 million to EUR 907 million. The external trade surplus in services increased by EUR 81 million to EUR 732 million, of which the travel services asset rose by EUR 26 million to EUR 357 million.

The net withdrawal of primary income decreased by EUR 58 million compared to May to EUR 453 million, mainly due to a EUR 111 million decrease in the net repatriation of investment income, while the employee income asset decreased by EUR 61 million. Within investment income, net withdrawals of profits from foreign direct investment in working capital were just EUR 439 million in June, down just EUR 16 million on May, while repatriated income from portfolio investment fell by EUR 99 million to EUR 127 million, MNB data show.