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External balance indicators improve in spite of pandemic

MNB

Photo by Andocs / Shutterstock.com

Hungary's external balance indicators improved last year, in spite of the pandemic, the National Bank of Hungary (MNB) said in a report on Tuesday, according to a report by state news wire MTI.

MNB noted in the quarterly Balance of Payments Report that Hungary had a current-account surplus for the year, while its external debt indicators reached historical lows and its FX reserves "significantly exceeded" levels expected and deemed safe by investors.

The downturn in tourism and transportation reduced Hungary's surplus in trade of services, but that impact was offset by lower import demand and an expansion in exports on the back of a recovery in industrial output and an improvement in terms of trade, according to the report.

Hungary's net external position using the savings approach was roughly zero during 2020 as net government borrowing rose because of falling revenue and a sharp increase in expenditures, while the financial savings of the private sector rose.

The report shows FDI inflow in Hungary was close to EUR 2.4 billion, but net FDI inflow was around zero because of domestic companies' investments abroad. 

Foreign-owned companies' profits fell to EUR 5.6 bln in 2020. At the same time, reinvested earnings declined and the ratio of profit repatriation rose close to 60%, MNB said in the report.

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