The central bank has published C/A balance figures this morning. The C/A deficit amounted to EUR 1.113bn in October-December 2007 (our expectation was EUR 1.25bn), taking the cumulative C/A deficit for FY 2007 to EUR 5.060bn (5% of GDP). At the same time, the 2006 C/A deficit was revised downwards to 6.1% of GDP, from 6.5% of GDP. To sum up it, the year 2007 brought significant improvement in the external economic balance situation, thanks to the favorable processes on the trade balance.
The trade balance remained in surplus, amounting to EUR 395mn in 4Q07, raising the FY 2007 trade surplus to EUR 1.431bn (1.42% of GDP). In 2006, the trade balance showed a deficit of 0.98% of GDP.
The deficit on the “Incomes” remained high in 4Q07, as well, amounting to EUR 1.994bn, which was EUR 381mn higher, seen in the same period of 2006.
On the financing side of the balance, non-debt creating financing finally turned to positive (EUR 588mn) in the last quarter of 2007. In FY 2007, however, it was still in negative territory. According to the statistics, inward and outward non-debt capital transactions showed a net outflow of EUR 3.852bn in 2007. It was favorable, however, that the FDI inflow to Hungary was higher than expected (EUR 4.170bn).
