Visegread External Trade: An Unhealthy Surplus

Hungary as a very open, manufacturing country has been strangely hit by the world economic recession. The country imports much of what it needs to produce and than export it, so it is not surprising that both export and import fell dramatically. All in all, this resulted in a very positive albeit non-sustainable trade balance. According to the Hungarian Central Statistics Office

In October 2009 the export volume fell by 3, while that of imports by 9 percent as compared to the low base level of the same month in the previous year. In January-October 2009, the volume of exports and imports fell by 15 and 21 percent, respectively, compared to the same period of the preceding year. Trade balance showed a surplus of HUF 1,069 billion (EUR 3,785 million), which meant an improvement of HUF 1,131 billion (EUR 4,100 million) compared to the deficit of HUF 62 billion (EUR 315 million) in January-October 2008.

There are a number of factors that came into play. Firstly, manufacturers did not import as much and used up their inventory to export to their largely contracted markets. Hungarian export are more euro-denominated than its imports where many commodities were paid in the weak dollar. Imports also fell as Hungarians consumed less. Exporters were also helped by a somewhat weaker forint, meaning that they received somewhat bigger forint revenues for their products. It remains to be seen if the Hungarian economy has adopted successfully and will run a healthy trade balance when some of these external factors will change after a world economic recovery.

A very similar pattern is visible in Slovakia, which is a smaller, and probably even more manufacturing-biased economy. The Statistical Office of the Slovak Republic reports that

In October, the total export of goods amounted to EUR 3 810,9 million, there was a 18,1 % year-on-year decrease. The total import of goods decreased by 21,8 % to EUR 3 585,6 million. The foreign trade balance was in surplus of EUR 225,3 million (it was higher than in October 2008 by EUR 158,9 million). Over the first ten months, compared with the corresponding period last year, the total export of goods decreased by 24,6 % to EUR 32 221,8 million and the total import of goods by 27,3 % to EUR 31 216 million.

The Czech Republic and Slovakia, also manufacturing national economies, also held a trade surplus in all months from Jan 2009 till Oct 2009.

(To be reviewed with Jan-Dec data in late February).