Periscope - MFB · 2017-10-08 · Periscope Periscope 2 March 2015 While in Spring 2014,...
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Periscope Hungarian Development Bank’s monthly report March 2015 Authors: Erzsébet Gém ([email protected]) Zsolt Szabó ([email protected]) Publisher: MFB Hungarian Development Bank Private Limited Company Editor in chief: Erzsébet Gém Contact: Nádor utca 31. H-1051 Budapest Tel.: +36 1 428 1769 Web: www.mfb.hu The views expressed in the analyses published by MFB Plc reflect the authors’ personal views and do not correspond in any circumstances to the Bank official views. The analyses are based on data obtained from credible sources but the authors do not take responsibilities for their authenticity. MFB Plc and the authors are not responsible for the accuracy of the forecasts. Focus Overview of financing based on the results of the 2014 Autumn MFB corporate survey The latest, Autumn 2014 corporate survey of the Hungarian Development Bank (MFB INDICATOR) indicates that despite diminishing loan interest rates, an upturn in internal demand and a slight deterioration of the financing situation of companies, the intention to raise funds is stagnating, while companies’ expectations regarding their financing situations for the next 12 months have improved somewhat. Hungarian companies are mainly looking for cheap funding: more than two-thirds of the respondents intend to apply for non-refundable support by Autumn 2015. Meanwhile, after a gradual decline, the percentage of companies intending to borrow in the next one-year period melted to 43.8% by Autumn 2014, whereas about one-third of the respondents showed interest in a combined financing product (comprising own resources and refundable and non-refundable support) in the future. Only one out of every twenty companies is planning on involving external capital. The upward trend has come to a halt and an increasing number of companies in Hungary suffer from a shortage of funds. Among the companies participating in the MFB INDICATOR corporate survey, a representative sample of the Hungarian corporate sector, the percentage of companies facing problems covering their running costs has come close to a one-and-a-half-year high (30.6%) by Autumn 2014. Another indication of resource-side difficulties is that the proportion of companies initiating investments without raising funds has climbed to a record high (18.4%), and that almost half (44.7%) of the companies are still postponing certain investments due to a shortage of funds (Chart 1). Instead of companies planning to raise funds or make investments, in Autumn 2014 it was mainly companies adopting a ‘wait and see’ approach that reported a positive turn in their financing positions, meaning that the improvement in the funding situation is providing less of a boost to developments than previously. Still, there are certain positive trends due to the accelerating economic growth. Between Spring and Autumn 2014, the percentage of companies neither needing external funding nor planning any investments (that is, engaging in restrained activity) decreased in most branches of the services sector, which is heavily reliant on domestic purchasing power. The percentage of companies perceiving an improvement in their financing situation increased to the highest degree among companies deriving their revenues entirely from Hungary. (continued on page 2) ῳ The Hungarian economy reached the highest growth rate in the EU at the end of 2014... (Page 3) ῳ After a half-year pause, net export once again contributed to economic growth... (Page 4) ῳ By the end of 2014, investments in the Hungarian economy lost momentum... (Page 5) ῳ Industrial dynamism could persist, but construction expectedly come to a halt in the coming months... (Page 6) ῳ Economic growth could become increasingly reliant on consumption... (Page 7) ῳ The labour market followed seasonal trends in the winter months... (Page 8) ῳ Inflationary processes could give new impetus to the monetary easing cycle in Hungary... (Page 9) ῳ With the elimination of retail foreign currency loans, the credit institution sector closed the year 2014 with a loss... (Page 10) ῳ Financial institutions’ plans indicate expanding loan supply for the upcoming months... (Page 11) ῳ The financing needs of the tertiary sector is rising, but corporate loan demand is faltering... (Page 12) ῳ The forint appreciated to a nine-month high against the euro in February... (Page 13) ῳ Promising year start in the budget according to January and February figures... (Page 14) Content 16.5% 25.4% 24.3% 21.6% 26.6% 12.6% 14.6% 13.4% 12.9% 11.1% 6.2% 13.9% 11.8% 12.9% 14.3% 16.7% 18.4% 35.4% 54.6% 56.0% 61.8% 43.3% 37.7% 41.4% 41.8% 43.2% 47.8% 44.7% 48.2% 20.0% 19.7% 16.6% 30.1% 35.8% 32.2% 31.9% 29.7% 24.4% 30.6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Summer 2009 Winter 2009 Summer 2010 Spring 2011 Autumn 2011 Spring 2012 Autumn 2012 Spring 2013 Autumn 2013 Spring 2014 Autumn 2014 Has daily financial problems Does not have sources for investments Does not need external fundraising (since Spring 2012: plans no investments) Does not need external fundraising (since Spring 2012: plans investments) Sources: MFB INDICATOR corporate surveys Chart 1: Financing situation of the companies
Transcript of Periscope - MFB · 2017-10-08 · Periscope Periscope 2 March 2015 While in Spring 2014,...
PeriscopeHungarian Development Bank’s monthly report
Mar
ch 2
01
5
Authors:
Erzsébet Gém ([email protected])Zsolt Szabó ([email protected])
Publisher: MFB Hungarian Development Bank Private Limited CompanyEditor in chief: Erzsébet GémContact: Nádor utca 31. H-1051 BudapestTel.: +36 1 428 1769 Web: www.mfb.hu
The views expressed in the analyses published by MFB Plc reflect the
authors’ personal views and do not correspond in any circumstances
to the Bank official views. The analyses are based on data obtained
from credible sources but the authors do not take responsibilities for
their authenticity. MFB Plc and the authors are not responsible for the
accuracy of the forecasts.
F o c u sOverview of financing based on the results of the 2014 Autumn MFB corporate survey
The latest, Autumn 2014 corporate survey of the Hungarian Development Bank (MFB INDICATOR) indicates that despite diminishing loan interest rates, an upturn in internal demand and a slight deterioration of the financing situation of companies, the intention to raise funds is stagnating, while companies’ expectations regarding their financing situations for the next 12 months have improved somewhat. Hungarian companies are mainly looking for cheap funding: more than two-thirds of the respondents intend to apply for non-refundable support by Autumn 2015. Meanwhile, after a gradual decline, the percentage of companies intending to borrow in the next one-year period melted to 43.8% by Autumn 2014, whereas about one-third of the respondents showed interest in a combined financing product (comprising own resources and refundable and non-refundable support) in the future. Only one out of every twenty companies is planning on involving external capital.
The upward trend has come to a halt and an increasing number of companies in Hungary suffer from a shortage of funds. Among the companies participating in the MFB INDICATOR corporate survey, a representative sample of the Hungarian corporate sector, the percentage of companies facing problems covering their running costs has come close to a one-and-a-half-year high (30.6%) by Autumn 2014. Another indication of resource-side difficulties is that the proportion of companies initiating investments without raising funds has climbed to a record high (18.4%), and that almost half (44.7%) of the companies are still postponing certain investments due to a shortage of funds (Chart 1). Instead of companies planning to raise funds or make investments, in Autumn 2014 it was mainly companies adopting a ‘wait and see’ approach that reported a positive turn in their financing positions, meaning that the improvement in the funding situation is providing less of a boost to developments than previously.Still, there are certain positive trends due to the accelerating economic growth. Between Spring and Autumn 2014, the percentage of companies neither needing external funding nor planning any investments (that is, engaging in restrained activity) decreased in most branches of the services sector, which is heavily reliant on domestic purchasing power. The percentage of companies perceiving an improvement in their financing situation increased to the highest degree among companies deriving their revenues entirely from Hungary. (continued on page 2)
ῳ The Hungarian economy reached the highest growth rate in the EU at the end of 2014... (Page 3) ῳ After a half-year pause, net export once again contributed to economic growth... (Page 4) ῳ By the end of 2014, investments in the Hungarian economy lost momentum... (Page 5) ῳ Industrial dynamism could persist, but construction expectedly come to a halt in the coming months... (Page 6) ῳ Economic growth could become increasingly reliant on consumption... (Page 7) ῳ The labour market followed seasonal trends in the winter months... (Page 8) ῳ Inflationary processes could give new impetus to the monetary easing cycle in Hungary... (Page 9) ῳ With the elimination of retail foreign currency loans, the credit institution sector closed the year 2014 with a
loss... (Page 10) ῳ Financial institutions’ plans indicate expanding loan supply for the upcoming months... (Page 11) ῳ The financing needs of the tertiary sector is rising, but corporate loan demand is faltering... (Page 12) ῳ The forint appreciated to a nine-month high against the euro in February... (Page 13) ῳ Promising year start in the budget according to January and February figures... (Page 14)
Content
16.5%25.4% 24.3% 21.6% 26.6%
12.6% 14.6% 13.4% 12.9% 11.1% 6.2%
13.9% 11.8% 12.9% 14.3% 16.7%18.4%
35.4%
54.6% 56.0% 61.8%43.3% 37.7% 41.4% 41.8% 43.2% 47.8%
44.7%
48.2%
20.0% 19.7% 16.6%30.1% 35.8% 32.2% 31.9% 29.7% 24.4% 30.6%
0%10%20%30%40%50%60%70%80%90%
100%
Sum
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Diagramcím
Has daily financial problemsDoes not have sources for investments
Does not need external fundraising (since Spring 2012: plans no investments)Does not need external fundraising (since Spring 2012: plans investments)
Sources: MFB INDICATOR corporate surveys
Chart 1: Financing situation of the companies
Periscope
Periscope March 20152
While in Spring 2014, one-quarter (27.4%) of companies anticipated an improvement of their financing situations in the next 12 months, by Autumn this ratio had risen to one-third (33.4%).Between Spring and Autumn 2014 the rise in the proportion of companies planning to raise funds stopped, standing at 57.0% at the time of both surveys, and the proportion of companies becoming increasingly uncertain also rose within the segment. At the same time, only one-fifth (21.4%, -2.1 percentage points compared to Spring) of companies are averse to obtaining external funds (Chart 2). Among companies with improving financing situations, the willingness to raise funds declined, while among companies with unchanged or deteriorating situations it picked up, which is in line with the plans announced by the Central Bank of Hungary in February 2015 (NHP+).Hungarian companies are mainly looking for cheap funds: about two-thirds (64.9%) of respondents intend to apply for non-refundable support by Autumn 2015; after a gradual decline, the proportion of companies planning on borrowing in the next one-year period melted to 43.8% by Autumn 2014, and one in every twenty companies (4.9%) indicated that they intended to involve external capital in the 12 months following the survey. About one-third of the respondents (30.9%) expressed potential inte-rest for combined financing products (consisting of own resources and refundable and non-refundable support) in the future, and an additional 42.0% stated that they could express their opinion once they know the details. Companies’ opinions regarding the ideal composition of such a product are relatively uniform: the ideal combined financing product envisioned by the respondent consists of about one-fifth (21.8%) own resources, half (50.5%) non-refundable support and one-quarter (27.7%) refundable resources (Chart 3).In the 12 months preceding the survey, 52.2% of companies applied for some form of loan product, which is 9.2 percentage points higher than the proportion of companies reporting intentions to borrow in the next 12 months in Autumn 2013. The higher than expected borrowing could be due to strengthening domestic demand, improving outlooks for returns on investments and decreasing loan costs.The main factor Hungarian companies consider before taking out a loan is still the interest rate, while the second aspect they take into account is other costs of funding. The importance of these decreased somewhat in the six months preceding the survey, but (likely due to falling interest rates on loans) the importance of collaterals and the required own resources have grown since Spring 2014.The largest deterrent to borrowing for companies remains the amount of collateral required by banks, followed by the type of collateral, the interest rate and loan supply. While interest rates (despite falling interest rates on loans) represent a somewhat more significant barrier than half a year previously, other types of obstacles have become less severe (Chart 4).The upward trend in optimism regarding expected loan supply that had been ongoing since Autumn 2011 has come to a halt. For the next 12 months, the percentage of companies expecting loan supply to grow (47.4%) still exceeds that of those anticipating a shrinkage (7.2%), while six months earlier these proportions were 51.6% and 5.7%. One-fifth of companies (19.2%) expect interest rates on loans to decrease over the next 12 months, 13.6% foresee an increase and 67.1% expect them to remain unchanged—the optimism seen in the Spring 2014 survey also diminished by Autumn 2014 as far as interest rate expectations were concerned (Chart 5).
-50 -25 0 25 50
Proportion of companiesexpecting rising interest ratesminus proportion of companies
expecting decreasing interest rates
Proportion of companiesexpecting increasing loan supplyminus proportion of companies
expecting decreasing loan supply
Autumn 2011
Spring 2012
Autumn 2012
Spring 2013
Autumn 2013
Spring 2014
Autumn 2014
Chart 5: Corporate expectations regarding changes in loan supply and interest rates in the coming 12 months
Sources: MFB INDICATORcorporate surveys
percentage point
26.9% 29.4% 35.2%21.1% 22.6% 26.9% 27.7% 31.7% 35.9% 29,8%
22.6% 18.8%25.3%
20.7% 22.1% 20.7% 18.3%20.5%
21.1% 27,2%
13.7% 14.2%
12.3%
14.6% 15.4% 12.7% 14.6%11.9% 8.7% 11,1%
10.7% 11.8%
12.9%
16.4% 15.2% 15.5% 13.8% 14.0% 10.7% 10,6%
26.1% 25.8%14.3%
27.1% 24.7% 24.1% 25.6% 21.9% 23.5% 21,4%
0%10%20%30%40%50%60%70%80%90%100%
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Does not plan Probably does not plan Awaits Probably plans Plans
Chart 2: The proportion of companies planning demandfor external funding in the next 12 months
Sources: MFB INDICATOR corporate surveys
3,0
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Tight credit supply High interest ratesOwn contribution Amount of collateral
* scale from 1 to 5, 1 - lowest barrier, 5 - greatest barrier
Sources: MFB INDICATOR corporate surveys
Chart 4: Major barriers created by financial institutions
32.9%38.2%
23.4%35.7%
33.1%22.7%
29.7%31.5%32.0%
28.3%28.1%
33.1%34.4%
30.9%
37.1%38.2%
47.4%45.0%
42.3%38.2%
39.2%41.6%
46.0%39.1%42.7%
41.6%40.6%
42.0%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
51-100%1-50%
0% - Does not exportEastern Hungary
Western HungaryCentral HungaryLarge companies
Medium sized companiesSmall sized companies
Micro firmsService sector
IndustryAgriculture
FULL SAMPLE
Size
of
expo
rt**
Reg
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Size
Sect
or
Has demand Demand depends on the details* elements: 1. own contribution, 2. non-refundable subsidy, 3. repayable sources** export revenues / total revenues
Chart 3: Corporate demand for combined funding sources*
Source: MFB INDICATOR corporate survey, Autumn 2014
Periscope
Periscope March 20153
GDP growthThe Hungarian economy reached the highest growth rate in the EU at the end of 2014• In Q4 2014 the eurozone and US economies recorded growth rates of 0.9% and 2.4%, respectively, while the Japanese GDP
was still shrinking (-0.4%) and China continued to grow at rates below 8% (Q4 2014: 7.3%). Business prospects have been deteriorating in the US and in China since November 2014, while in the eurozone and in Germany, business confidence could still not persistently exceed pre-crisis levels, which was also worsened in the past few months by the Greek debt crisis and the Russia–Ukraine conflict (Charts 1–2).
• Between October and December 2014, the Hungarian economy grew by 0.8% (q/q), while compared to Q4 2013 its growth rate was 3.4%. Based on available GDP statistics this made the Hungarian economy the best performer among EU Member States in the last three months of 2014 (Charts 3–4). The main driver of growth on the utilisation side was, for the first time since 2008, once again consumption, contributing to growth by 1.7 percentage points. Investment momentum came to a halt due to the partially successful implementation of postponed developments and to the elimination of EU funds. On the production side, all sectors contributed to growth, and the temporary loss of momentum of the industry was offset by recovery in the services sector, being relatively more reliant on internal demand (Charts 5–6).
•
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Quarter/quarter (LHS) Year/year (RHS)
Chart 3: GDP growth* in Hungary
Sources: HCSO, MFB
* seasonally adjusted data
-15,0%
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Final consumption (LHS) Gross capital formation (LHS)Net export (LHS) GDP growth (RHS)
Chart 5: Contribution to the Hungarian GDP (y/y)
Sources: HCSO, MFB-10,0%
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Agriculture (LHS) Industry (LHS) Construction (LHS)Services (LHS) GDP (RHS)
Chart 6: Contribution to GDP growth (y/y)
Sources: HCSO, MFB
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USA Eurozone Germany China
Sources: Reuters, MFB
Chart 2: Business climate* in certain area of the global economy(January 2007 = 100%)
*Eurozone: ESI Index, China: PMI Index, USA: ISM Index, Germany: IFO Index
-0,5% 0,0% 0,5% 1,0% 1,5% 2,0% 2,5% 3,0% 3,5%
ItalyAustriaFinlandFrance
PortugalEurozoneBelgium
NetherlandsEU 28
BulgariaDenmark
GreeceCzech Republic
GermanySpain
SloveniaLatvia
LithuaniaSweden
United KingdomPoland
Hungary
Sources: Eurostat, MFB
Chart 4: GDP growth in Q4 2014* in the European Union** (y/y)
* seasonally adjusted data; ** with the exception of Estonia, Ireland, Croatia, Luxembourg, Romania, Malta, Finland, Cyprus
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Germany Eurozone Japan USA China
Chart 1: GDP growth* in certain area of the global economy
Sources: Reuters, MFB
* year/year, seasonally adjustad data
Periscope
Periscope March 20154
Foreign trade, current accountAfter a half-year pause, net export once again contributed to economic growth• By Q4 last year, import and export growth rates reached an equilibrium, and so, after a two-quarter standstill, net exports
once again contributed to economic growth (by 0.6 percentage points) (Chart 1).• Between October and December 2014, Hungarian goods export and import volumes expanded by 9.4%, while in 2014 as a whole,
this rate was 8.7% and, due to accelerating investments and increasingly dynamic consumption, 10.0%, respectively. The trade balance had a surplus of HUF 1 976.9 billion between January and December, similar in magnitude to three years before. In Q4 2014, falling oil prices, too, boosted fuel imports, driven mainly by the filling of gas storage facilities, while agricultural exports were unable to grow due in part to the Russian embargo. Hungarian companies’ export expectations indicate caution, as the percentages of companies with improving and worsening expectations came closer between Spring and Autumn 2014 (Charts 2-4).
• The current account balance recorded a surplus in Q4 last year, with the surplus amounting to HUF 114.8 billion in Decem-ber 2014 thanks to the positive balance of the trade in goods and services. As far as the financial account is concerned, the deterioration of the central bank balance in December (HUF -51.1 billion) was offset by the improving balances of other sectors (corporate, household) (HUF +239.8 billion) and other monetary institutions (HUF +304.3 billion) (Charts 5–6).
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Chart 4: Export sales of Hungarian firms
Source: MFB INDICATOR corporate surveys
*difference between the share of firms increased their sales and that of those facing decline in sales**difference between the share of firms expecting increasing sales and that of those expecting declining sales
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Sources: HCSO, MFB
Chart 2: Trade balance in Hungary (January - December)
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Sources: CBH, MFB
Chart 5: Monthly changes in the Hungarian current account
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Net externalfinancing capacity
Sources: CBH, MFB
Chart 6: Monthly changes in the Hungarian financial account
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Food, beverages, tobacco
Crude materials
Fuels, electric energy
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ExportImport
Chart 3: Main commodiyt groups of external trade(Q4 2014, y/y)
Sources: HCSO, MFB
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Net export's contribution to GDP growth (y/y, RHS)Export growth (y/y, LHS)
Chart 1: Export growth and net export's contribution to GDP growth
Sources: HCSO, MFB
Periscope
Periscope March 20155
InvestmentsBy the end of 2014, investments in the Hungarian economy lost momentum• Investment volumes in an annual comparison grew—after a sharp increase of 15.9% in Q3 last year—by 1.9% between
October and December, while the rate of gross fixed capital formation (y/y) also slowed down from 13.2% to 1.9% (Chart 1). Due to the dynamic growth of investments last year (+14.0% in 2014), the rate of gross fixed capital formation as a percentage of the GDP for the last four quarters stood at 22.2%, 1.6 percentage points higher than one year before (Chart 2).
• Private sector investments grew for the seventh consecutive year (+7.1% y/y), while investments by budgetary institutions fell by 17.1% due to the high basis in late 2013 (Chart 3). Investments grew vigorously in Q4 last year in transport, warehousing, wholesale and retail trade, and electricity production, while education, manufacturing (similarly to a basis effect) and real estate saw a decline (Chart 4).
• With the rate of industrial capacity utilisation climbing to a level last seen four years ago, investments could find additional impetus in the coming quarters, but the temporary shrinkage of community funds, the decline in orders due to the European business cycle (Charts 5–6) and the standstill in investment appetites (MFB Periscope, February 2015) will likely hold back dynamism this year.
15%
20%
25%
30%
35%
40%
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Q2
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Q4
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Q4
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Q4
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Q2
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Q4
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Q2
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Q4
2013
Q2
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Q4
2014
Hungary Czech Republic Poland Slovakia Romania
Chart 2: The gross fixed capital formation toGDP ratio* in Central Eastern Europe
Sources: Eurostat, HCSO, MFB
* 4-quarter rolling average
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
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Q1
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2012
Q1
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Q3
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Q3
2014
Hungary Czech Republic Poland Slovakia Romania
Chart 1: Gross fixed capital formation inCentral and Eastern European countries (y/y)
Sources: Eurostat, HCSO, MFB
* not seasonally adjusted data
-30%-20%-10%0%10%20%30%40%50%60%70%
-30%-20%-10%
0%10%20%30%40%50%60%70%
Q1
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Q3
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Q1
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Q3
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Q1
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Q3
2014
Business sector* (y/y) Budgetary institutions (y/y)
Chart 3: Investment activity in the public andbusiness sector in Hungary
* corporations with more than 49 employees
Sources: HCSO, MFB
6.9%
-1.6%
1.9%-15.7%
-4.1%
-1.1%
3.1%
4.5%
10.5%
11.6%
13.9%
19.0%
-20% -10% 0% 10% 20% 30%
Of which: Machines, vehiclesOf which: Construction
EducationManufacturing
Real estate activitiesConstruction sector
ICT sectorAgriculture
Electricity, gaz, steamWholesale and retail trade
Transportation, storage
Q4 2014 2014
TOTAL
Sources: HCSO, MFB
Chart 4: Investment volume (y/y) in the main sectors
45%50%55%60%65%70%75%80%85%90%95%
45%50%55%60%65%70%75%80%85%90%95%
Q1
2008
Q3
2008
Q1
2009
Q3
2009
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2010
Q3
2010
Q1
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Q3
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Q1
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Q3
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Q1
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Q3
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Q1
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Q3
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Q1
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Hungary Czech Republic Poland Romania Slovakia
Chart 5: Capacity utilization in manufacturing
Sources: Eurostat, MFB
-24%-20%-16%-12%-8%-4%0%4%8%12%16%20%24%
-60-50-40-30-20-10
0102030405060
Q4
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Consumer goods* (LHS) Intermediate goods* (LHS)Investment goods* (LHS) Investments* (RHS)
Chart 6: New orders and gross fixed capital formation (y/y)
Sources: European Commission, HCSO, MFB
* 4-quarter rolling average
prop
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Periscope
Periscope March 20156
Industry and constructionIndustrial dynamism could persist, but construction expectedly come to a halt in the coming months• In Q4 2014, the gross added value of industry and construction expanded by 4.0% and 6.2% (y/y), respectively, making the
two sectors contribute 1.0 and 0.3 percentage points to GDP growth, respectively. Construction performance continues to boost growth for the seventh consecutive quarter (Chart 1). In December 2014, industrial production grew by 4.7% (y/y), but compared to November it recorded a 1.6% shrinkage. Preliminary data indicate that in January this year the industry found new momentum, managing growth rates of 7.7% (y/y) and 4.3% compared to December (Chart 2).
• 2014 saw all subsectors of manufacturing grow, with growth having a broad basis. Among the most significant subsectors, production growth in the automotive industry (+20.6%) was the most impressive, but this dynamism slowed down to 11.1% by December (Chart 3). The decline in domestic orders and the temporary deterioration of German business expectations could hamper the momentum of industrial production in the next couple of months, but industry could remain a driver of the Hungarian economy in 2015, too (Charts 4–5).
• The delay in the disbursements of the new EU budgetary cycle is also noticeable in construction: the amount of new contracts and the total contract amount fell short of last year’s figure by 43.9% and 16.7%, respectively, while output fell by 2.2% (Chart 6).
-20%-15%-10%-5%0%5%10%15%20%25%30%35%
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Stock of orders at the end of the month* (LHS)New orders* (LHS)Construction output* (RHS)
Chart 6: Construction production and orders (y/y)
Sources: HCSO, MFB
* 3-month rolling average
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IFO index: business expectations (LHS)Manufacturing production (y/y, RHS)
Chart 4: German business expectations (IFO index) and Hungarian manufacturing production
Sources: HCSO, CESifo, MFB
IFO index: adv. 3 months
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Domestic orders* Export orders*Domesic sales* Export sales*
Sources: HCSO, MFB
Chart 5: Manufacturing sales and orders (y/y)
* 6-month rolling average
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Month/month (RHS) Year/year (LHS) Sources: HCSO, MFB
Chart 2: Industrial production* in Hungary
*seasonally and calendar adjusted data
-10%
-8%
-5%
-3%
0%
3%
5%
-10,0
-7,5
-5,0
-2,5
0,0
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5,0
Q1
2008
Q3
2008
Q1
2009
Q3
2009
Q1
2010
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Q1
2012
Q3
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Q1
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Q3
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Q1
2014
Q3
2014
perc
enta
ge p
oint
Manufacturing Construction (LHS) GDP (RHS)
Chart 1: Manufacturing and construction sector'scontribution to GDP growth (y/y)
Sources: HCSO, MFB
108.6%
95.6%
97.9%
102.0%104.1%
108.2%
108.7%
111.1%
112.1%
112.2%
119.3%
119.7%
123.7%
95% 100% 105% 110% 115% 120% 125%
TOTAL MANUFACTURING
Manufacture of pharmaceuticals
Metal products
Other manufacturing
Food, beverages, tobacco
Electrical equipments
Wood and paper products
Transport equipment
Computer, electronic prod.
Textiles, leather prod.
Rubber and plastic prod.
Chemical prod.
Manufacture of machinery
Sources: HCSO, MFB
Chart 3: Production* of the manufacturing sub-sectors(December 2014)
* the same period of the last year = 100%
Periscope
Periscope March 20157
ConsumptionEconomic growth could become increasingly reliant on consumption• Hungarian households’ consumption expenditure was up 1.9% (y/y) in Q4 last year, with actual consumption contributing a
total of 0.9 percentage points to economic growth between October and December 2014 (Chart 1).• Retail sales grew by 0.3% m/m and 5.7% y/y in December 2014, while in January 2015 they recorded an annual growth of
8.2%, a rate not seen in years (Chart 2). Demand for non-food products and fuel has been rising rapidly for months, the former being driven by the implementation of previously postponed consumption and the latter by falling fuel prices (Chart 3).
• The households sector continues to be a net loan repayer for the time being, but since May 2014—with the exception of the Christmas period (December)—the volume of new forint loans has been above the volume of repayments (Chart 4). In the coming months, the settlement with borrowers could give a further overall boost to household purchasing power, which is also supported by decreasing price levels and rising real wages (Chart 5).
• Hungarian households also look promising in a regional comparison, and consumption could become an increasingly important driver of GDP growth this year (Chart 6).
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Poland Czech Republic Slovakia Hungary Romania
Chart 6: Consumer confidence* in Central and Eastern Europe
Sources: European Commission, MFB
* seasonally adjusted data-8%
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Retail trade volume Net real wages*
Chart 5: Retail trade and net wages in Hungary (y/y)
Sources: HCSO, MFB
*without fostered workers
-500-450-400-350-300-250-200-150-100-50050100150
-500-450-400-350-300-250-200-150-100
-500
50100150
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HU
F bi
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HU
F bi
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HUF loansFX loansTotal loans
Chart 4: Change in total amount of outstandinghousehold loans through loan transactions
Sources: CBH, MFB
-10%-8%-6%-4%-2%0%2%4%6%8%10%12%
-10%-8%-6%-4%-2%0%2%4%6%8%
10%12%
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Non-food products Foods Fuels
Chart 3: Retail trade by the main product groups (y/y)(volume index adjusted for calendar effects)
Sources: HCSO, MFB
-12%
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8%
12%
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Month/month (LHS) Year/Year (RHS)
Sources: HCSO, MFB
Chart 2: Retail trade volume in Hungary
-10,0%
-7,5%
-5,0%
-2,5%
0,0%
2,5%
5,0%
-10,0
-7,5
-5,0
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Q1
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2014
perc
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oint
Social transfers in kind from NPISHs (LHS)Social transfers in kind from government (LHS)Household final consumption expenditure (LHS)GDP growth (RHS)
Chart 1: Households' actual consumption's contributionto GDP growth (y/y)
Sources: HCSO, MFB
Periscope
Periscope March 20158
Labour marketThe labour market followed seasonal trends in the winter months• Between November 2014 and January 2015 the unemployment rate climbed to 7.4%, which is 1.4 percentage points lower
than one year before. In the same period, the activity and employment rates stood at 59.0% and 54.6%, respectively, reflecting a 1.4% and 2.1% change within one year. The number of unemployed people sank by 53.9 thousand in 12 months, whereas the number of employed people rose by 140.6 thousand. The seasonal increase in unemployment was due in part to the fact that by January, the number of new jobs announced had melted to a two-year low (23.4 thousand job openings) due to the number of subsidised jobs falling to a 24-month low (Charts 1–2). The number of employees grew by 2.7% in the last three months of 2014 compared to Q4 2013, with marked decreases only recorded in the real estate sector (due to the high basis). The number of fostered workers did not decrease in the final months of 2014 either, meaning that seasonality in the segment has diminished (Charts 3–4). Employment growth in manufacturing could continue over the next months (Chart 5).
• The rise of gross wages in the private sector exceeded that in the public sector in the last three months of 2014 (+3.4% vs. +2.4%) and on an annual basis as well (+3.8% vs. +1.3%), but wage statistics in the latter were worsened by payments to public workers—excluding them, public sector wages rose by 5.9% last year (Chart 6).
47%48%49%50%51%52%53%54%55%56%57%58%59%60%
0%1%2%3%4%5%6%7%8%9%
10%11%12%13%
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Unemployment rate (LHS) Employment rate (RHS) Activity rate (RHS)
Sources: HCSO, MFB
Chart 1: Activity rate, employment rate and unemployment ratein Hungary (population aged 15-74)
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Registered new vacancies (LHS) Not supported new vacancies (y/y, RHS)
Chart 2: Total registered new vacanciesand not supported vacancies
Sources: National Employment Service, MFB
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Number of fostered workers (LHS)Changes in number of fostered workers (y/y, RHS)
Sources: HCSO, MFB
Chart 4: Number of fostered workers in Hungary
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Employment in manufacturing (y/y, RHS) Employment expectations (LHS)
Chart 5: Employment expectations and number of employeesin the manufacturing sector
Sources: European Commission, HCSO, MFB
Employment expectations:
5 months adv.
103.0%103.4%102.4%
100.5%101.3%
102.0%102.1%
102.8%103.3%
103.3%103.4%103.8%103.9%
104.7%105.2%105.3%
108.4%
100% 102% 104% 106% 108% 110%
TotalBusiness sector
Budgetary institutionsHealth care
Public administrationAccommodation, food service act.
Wholesale and retail tradeTransportation, storage
IndustryICT
Financial intermediationAgriculture
ConstructionEducation
Social work activitiesAdministrative and support service act.
Real estate activities
Sources: HCSO, MFB
Chart 6: Changes in gross wages* (October - December 2014, same period of the previous year = 100%)
* gross earnings withoutpremiums and one month bonuses
102.7%102.6%102.2%
89.0%98.5%
99.8%100.0%
101.6%101.6%101.7%102.8%
104.0%104.7%105.1%105.4%105.6%
107.0%
85% 90% 95% 100% 105% 110%
TotalBusiness sector
Budgetary institutionsReal estate activities
Financial intermediationSocial work activities
ConstructionEducation
Health careWholesale and retail trade
IndustryPublic administration
Accommodation, food service act.ICT
Transportation, storageAgriculture
Administrative & support service act.
Sources: HCSO, MFB
Chart 3: Changes in number of employed persons(Q4 2014 , same period of the previous year = 100%)
Periscope
Periscope March 20159
InflationInflationary processes could give new impetus to the monetary easing cycle in Hungary• The 12.9% plummet in the price of Brent crude in January was followed by a 27.4% adjustment in February as a result of
a reduction of production capacities and a curbing of oil companies’ investment plans, resulting in a per barrel price of USD 61.9 at the end of the month (Chart 1).
• In December 2014, the price of export goods in Hungary rose by 1.5% on average (y/y), while the import price index fell to 0% due to the plunge of oil prices, and for similar reasons, industrial producers’ prices decreased by an average of 1.0% in an annual comparison in January. Consumer prices in the Hungarian economy decreased by 0.2% m/m and 1.4% y/y on average in the first month of 2015. The 12-month core inflation rate hit a nine-year low of 0.7%, moving even further from the 3% inflation target, and the inflation indicators of the Central Bank of Hungary, too, predict low inflationary pressures (Charts 2–4). According to the Central Bank’s February announcement an evaluation of economic trends could necessitate further monetary easing in March. The negative 12-month inflation rate was caused by price decreases for fuels, food and goods with regulated prices (Chart 5). An important factor in monthly price decreases was the 3.1% drop in fuel prices, as well as the 3.3% decrease in the prices of clothing following post-Christmas sales (Chart 6).
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$/ba
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CRB commodity price index (LHS) CRB foodstuff price index (LHS)Brent Crude Oil (RHS)
Chart 1: Commodity price indices and world crude oil price
Sources: Reuters, MFB
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CPI (m/m, RHS) CPI (y/y, LHS) Core inflation (y/y, LHS)
Chart 3: Core inflation, monthly and yearly changesof consumer price index in Hungary
Sources: HCSO, MFB
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Demand sensitive* inflation
Core inflation excluding indirect taxes
Sticky price inflation
Chart 4: Underlying inflation indicators (y/y)
Sources: CBH, MFB
*excluding changes in processed food prices from core inflation adjusted for tax changes
-3%-2%-1%0%1%2%3%4%5%6%7%
-3%-2%-1%0%1%2%3%4%5%6%7%
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Foods Industrial productsMarket services Market energyAlcohol, tobacco FuelRegulated goods & services CPI
Chart 5: CPI by the main groups of goods and services
Sources: CBH, MFB
-0.2%
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0.0%
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%
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%
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%
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%
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%
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%
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%
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Total
Clothing and footwear
Other goods, including motor fuels
Consumer durable goods
Fuel and power
Services
Alcoholic beverages, tobacco
Food
Chart 6: Monthly changes of consumer prices by the main groups of products and services
0.4%Chart 6: Changes of consumer prices by the main groups
of products and services (January 2015, m/m)
Sources: HCSO, MFB
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2013
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.01
Pruducer price index of industry
Import price index
Export price index
Chart 2: Producer price index of industry, export price indexand import price index in Hungary (y/y)
Sources: HCSO, MFB
Periscope
Periscope March 201510
Banking sectorWith the elimination of retail FX loans, the credit institution sector closed the year 2014 with a loss• In 2014, credit institutions operating as joint-stock companies made a loss after tax of HUF -424.1 billion, representing a
historic low since the beginning of recording domestic statistics. According to last year’s calculations by the central bank, the settlement of retail foreign currency loans will cause a HUF 784 billion loss to the banking sectors, meaning that without this project, the credit institutions sector would have made a profit last year as well (Chart 1). Assets (+6.3%) and the gross and net loan amount of non-financial companies (+0.2% and +2.4%, respectively) already rose last year, but the gross total of loans and the amount of household loans continued to shrink (Chart 2).
• Indications of low risk appetites are that on the one hand by the end of December, the loan-to-deposit ratio had shrunk below 100% to 96.9% (due in part to the dynamic growth in retail deposits), and on the other the capital adequacy ratio (17.0%) remained high (Charts 3–5). The ratio of non-performing loans in the corporate segment diminished by 1.5% in one quarter (14.1% at the end of 2014), and the banking portfolio could further improve as the activity of Mark Zrt., a company set up to deal with bad real estate loans, kicks off. In the last quarter, the NPL rate calculated for retail clients remained unchanged, still at peak levels (19.2%) (with the introduction of private bankruptcy potentially bringing some easement), while in the local governments segment it fell by 1.1 percentage points to 3.3% (Chart 6).
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Hungary Poland Czech Republic Slovakia Romania
Chart 5: Capital adequacy ratio of the banking sectorin some Central Eastern European countries
Sources: CBH, KNF, CNB, NBS, BNRO, MFB
0%2%4%6%8%10%12%14%16%18%20%
0%2%4%6%8%
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Total loans Corporate loansHousehold loans Loans of local governments
Chart 6: Proportion of non-perfoming loans*
* total amount of loans overdue over 90-days / total loans
Sources: CBH, MFB
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F bi
llion
HU
F bi
llion
Foreign liabilitiesDomestic deposits
Chart 4: Domestic deposits and foreign liabilitiesof Hungarian credit institutions*
*without MFB, EXIM, KELER
Sources: CBH, MFB
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Household sector
Total
Chart 3: Loan-to-deposit ratio (LTD ratio) of credit institutions*(December 2003 - December 2014)
Sources: CBH, MFB
* without MFB, EXIM, KELER
7 246.1
6 716.9
6 514.3
6 530.0
5 982.6
5 734.5
5 745.3
20 230.3
18 873.0
19 080.1
19 121.8
16 240.2
15 394.3
15 001.1
29 177.9
28 996.4
28 125.3
28 797.3
26 300.7
25 528.2
27 132.4
0 5 000 10 000 15 000 20 000 25 000 30 000
31.12.2008
31.12.2009
31.12.2010
31.12.2011
31.12.2012
31.12.2013
31.12.2014
Total assets Total loans Total loans to non-financial enterprisesSources: CBH, MFB HUF billion
Chart 2: Balance sheet total and total loans of Hungarian credit institutions*
* without MFB, EXIM, KELER
174.4
275.1
314.2 356.8
324.7
236.6 209.1
12.3
-243.3
-164.0
21.2
-424.1-500
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0
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500
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
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**
HU
F bi
llion
Pre-tax profit After-tax profit
Chart 1: Pre-tax and after-tax profitof Hungarian credit institutions*
* without MFB, EXIM, KELER
Sources: CBH, MFB
** preliminary data
Periscope
Periscope March 201511
Corporate fundingFinancial institutions’ plans indicate expanding loan supply for the upcoming months• According to the most recent MFB INDICATOR corporate survey conducted in Autumn 2014, companies expecting a growth
of loan supply remain a majority compared to companies anticipating a shrinkage, but this optimism has abated somewhat in the past six months, especially in agriculture and among micro and small enterprises (Chart 1). This is partly in line with the results of the latest lending survey published by the Central Bank of Hungary in March: a larger percentage of financial institutions are planning to expand their corporate loan supply by mid-2015, and lending will especially target smaller companies (Chart 2). MFB’s survey indicates that the main means by which banks screen companies interested in borrowing is the amount of collaterals required, while the central bank lending survey indicates that lending standards could ease over the coming months (Charts 3–4).
• The average interest rate on corporate forint loans with maturities over 5 years reached a new historic low, falling from 4.26% in December 2014 to 4.14% in January 2015 and approaching the central bank base rate. This means a record low premium of 155 basis points over similar euro loans, and represents a 164 basis point margin compared to the NHP interest rate ceiling of 2.5% (Charts 5–6).
-60%
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Large and medium corporations Small and micro enterprises
Chart 4: Planned changes in credit standards* in thenext 6 months by the size of the borrower
* net change indicator, positive: tighteningSources: CBH lending surveys, MFB
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Large and medium corporations Small and micro enterprises
Chart 2: Estimation of change in the credit supply in the next 6 months according to the Hungarian credit institutions*
* net change indicator, proportion of bank planning increase minus proportion of banks planning decrease
Sources: CBH lending surveys, MFB
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BUBOR
EURIBOR
HUF loans -over 5 years
HUF loans - 1-5years
EUR loans inHungary - over5 yearsEUR loans inHungary - 1-5years
Chart 5: Interbank interest rates*, andinterest rates on corporate loans**
** annualised interest rates weighted by month-end values* 3-month interbank rates
Sources: ECB, CBH, MFB
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Hungary
CzechRepublic
Poland
Slovakia
Romania
Bulgaria
Chart 6: Interest rates on corporate loans* in Central and Eastern European countries
Sources: ECB, CBH, MFB
* annualised interest rates over 5 year maturity, weighted by month-end values, in national currency
-30 -20 -10 0 10 20 30 40 50 60 70
Large companies
Medium companies
Small enterprises
Micro enterprises
Service sector
Industry
Agriculture
Total sample
Autumn 2011Spring 2012Autumn 2012Spring 2013Autumn 2013Spring 2014Autumn 2014
5. ábra: A következő 12 hónapban a banki hitelezés volumenében várható válatozás a vállalatok szerint (nettó mérleg*)
* proportion of companies expecting increasing credit supply minus proportion of companies waiting decreasing
loan supply, percentage point
Chart 1: Estimation of change in the credit supply in the following 12 months according to the corporate sector
Sources: MFB INDICATOR corporate surveys
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umn
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ng20
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umn
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umn
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ng20
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Aut
umn
2014
Tight credit supply High interest ratesOwn contribution Amount of collateral
* scale from 1 to 5, 1 - lowest barrier, 5 - greatest barrier
Sources: MFB INDICATOR corporate surveys
Chart 3: Major barriers created by financial institutions
Periscope
Periscope March 201512
Corporate fundingThe financing needs of the tertiary sector are rising, but corporate loan demand is faltering• In January the amount of corporate loans as regards transactions decreased by HUF 47.1 billion. Foreign currency loan
reimbursements exceeded new lending (HUF -72.8 billion), and this was not offset by the corporate sector being a net borrower in forints (HUF +25.7 billion), meaning that in the Hungarian currency, companies have been borrowing more than they are repaying for a year now. In euros, the total loan amount of Hungarian companies is so far contracting at an annual rate above the regional average (Charts 1–2).
• In the upcoming quarters, the need to raise funds could strengthen, especially among companies in the service sector, which is due largely to an increase in internal demand. Within six months, the percentage of companies planning to take out loans by Autumn this year fell by 4.7 percentage points to 43.8% by Autumn 2014 according to the MFB corporate survey (Charts 3–4). The most recent lending survey of the Central Bank of Hungary indicates, however, that credit institutions are anticipating a continuing increase in loan demand, especially on the part of smaller enterprises. Still, the lending survey also indicates that incentives to demand weakened in Q4 2014 (Charts 5–6).
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F bi
llion
HU
F bi
llion
HUF loansFX loansTotal loans
Chart 1: Change in total amount of outstandingnon-financial corporate loans through loan transactions
Sources: CBH, MFB-15%
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Czech Republic Poland Romania Slovakia Hungary
Chart 2: Change in total amount ofoutstanding non-financial corporate loans (y/y)*
Sources: ECB, MFB
* change in total value converted to euro
-20%
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Large and medium corporationsSmall and micro enterprises
* net change indicator, positive: increase
Sources: CBH lending surveys, MFB
Chart 5: Demand for corporate loans in the next 6 monthsaccording to the Hungarian credit institutions' view*
0.0% 0.0%
41.4%
0.0%
31.0%
20.8%25.7% 23.7%
26.0% 26.7%
73.8%
52.8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Q3 2014 Q4 2014
Change in customer's ownliabilities
Change in the level ofinterest rates
Change in customerinventory financing needs
Change in customer accountsreceivable financing needs
Change of attractiveness ofother bank or non-bankcredit sources
Change in customerinvestment in plant orequipment
Chart 6: Factors contributing to the change in demand for loans in the next 6 months according to the Hungarian credit institutions' view*
Sources: CBH lending surveys, MFB
* net change indicator, positive: supports increase
1
23
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91011
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0% 20% 40% 60% 80% 100%
Aut
umn
2014
Spring 2014
1 - plant production2 - livestock farming3 - hunting and forestry4 - food industry5 - energy sector6 - construction industry7 - wood processing8 - metal processing9 - machine industrys10 - road vehicle manufacturing11 - textile industry12 - chemical production13 - motor vehicle trade & repair14 - ICT services15 - property transactions16 - retail trade17 - community services18 - engineering19 - wholesale trade20 - transport, warehousing21 - accounting advisory22 - tourism, catering
decreasing demand
increasing demand
* probably or definitely plans
Chart 3: The proportion of companies planning demand*for external fundraising in the next 12 months
Sources: MFB INDICATOR corporate surveys
45.9%
48.3%
38.3%
45.7%
47.0%
37.8%
42.1%
49.0%
43.6%
30.4%
40.1%
47.9%
42.4%
43.8%
0% 5% 10%15%20%25%30%35%40%45%50%
51-100%
1-50%
0% - Does not export
Eastern Hungary
Western Hungary
Central Hungary
Large companies
Medium sized companies
Small sized companies
Micro firms
Service sector
Industry
Agriculture
FULL SAMPLE
Size
of
Expo
rt*
Reg
ion
Size
Sect
or
* export revenues / total revenues
Chart 4: Proportion of companies planning demandfor loans in the next 12 months
Source: MFB INDICATOR corporate survey, Autumn 2014
Periscope
Periscope March 201513
Exchange ratesThe forint appreciated to a nine-month high against the euro in February• After the January abolishing of capping, the CHF/EUR exchange rate regained, with the franc weakening by 2.4% against the
euro. However, the euro continued its depreciation against the US dollar, losing 0.6% in value in February (Chart 1).• The temporary resolution of the Greek debt crisis, the Minsk Protocol ending the Ukraine–Russia military conflict with a
ceasefire and the asset purchase programme of the European Central bank scheduled to start in March all had a positive impact on global risk appetites in February, and contributed to the forint appreciating to a nine-month high against the euro. Among regional currencies, the Romanian leu strengthened by 0.02%, both the Czech koruna and the Polish zloty by 1.3%, and the Hungarian forint by 2.9% against the euro. The forint strengthened by 2.3% and 4.4% against the US dollar and the Swiss franc, respectively (month-end exchange rates: 303.0 HUF/EUR, 269.6 HUF/USD, 284.9 HUF/CHF) (Charts 2–4).
• The lack of inflationary pressure and the rising chance of upgrading Hungarian debt once again revived expectations regarding interest rate cuts by the Central Bank of Hungary, which is also noticeable in the decrease of forward exchange rates (Charts 5–6); however, the forint was supported by the settlement of relations between the Hungarian government and financial institutions, as well as the fact that expectations of participants of the real economy are still at pre-crisis levels.
97%
98%
99%
100%
101%
97%
98%
99%
100%
101%
30.0
1.20
15
06.0
2.20
15
13.0
2.20
15
20.0
2.20
15
27.0
2.20
15
Czech koruna Hungarian forint Romanian leu Polish zloty
Sources: ECB, MFB
* 31.12.2014 = 100%
Chart 3: The exchange rates of Central and Eastern European currencies against the euro
strengthening against the euro
5
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15
20
25
30
35
295
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325
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poin
t
HUF/EUR (LHS) VIX index (RHS)
Chart 2: The HUF/EUR exchange rate and the global risk appetite
Sources: CBOE, ECB, MFBincreasing global risk appetite
0,6
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1,0
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1,5
1,6
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CHF/EUR CHF/USD
Chart 1: The exchange rate of the Swiss francagainst the US dollar and the euro
Swiss franc strengthening
Swiss National Bank sets minimum exchange rate at 1.20 CHF/EUR
210220230240250260270280290300310320
280285290295300305310315320325330335
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HUF/EUR (LHS) HUF/USD (RHS) HUF/CHF (RHS)
Chart 4: The exchange rate of the forint against theSwiss franc, the US dollar and the euro
Sources: ECB, MFB
1,50%2,00%2,50%3,00%3,50%4,00%4,50%5,00%5,50%6,00%6,50%7,00%7,50%
265270275280285290295300305310315320325
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HUF/EUR (LHS)Central Bank's base rate (RHS)Interest rate expectations on 27th February 2015 (RHS)Interest rate expectations on 30th January 2015 (RHS)Interest rate expectations on 31th December 2014 (RHS)
Chart 5: The HUF/EUR exchange rate, the Central Bank's base rate and market based expectations about the base rate in the future*
* based on BUBOR fixings and 1x4,3x6, 6x9, 9x12forward rate agreements (FRAs)
Sources: ECB, CBH, MFB
295
300
305
310
315
320
325
330
335
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HU
F/EU
R e
xcha
nge
rate
HUF/EUR spot exchange rateHUF/EUR forward rate (1-year)HUF/EUR forward rate (2-year)
Chart 6: HUF/EUR spot and forward rates
Sources: Reuters, MFB
Periscope
Periscope March 201514
General government and its financingPromising year start in the budget according to January and February figures• In January the central budget deficit stood at HUF 104.4 billion, that is, 12.6% of the annual target, while one year previously
the deficit was HUF 166.6 billion, 19.9% of last year’s target. The main reason for the balance being more favourable than in January 2014 was a sharp increase of HUF 63.8 billion in revenues, while expenditure rose by HUF 1.6 billion. January consumption tax revenues, as well as payments received from corporate sector and the households exceeded the figures from the same period of last year in both amount and proportion. Based on preliminary budget figures for the first two months (indicating a deficit of HUF 379.8 billion, HUF 202.3 billion lower than one year before) and further growth of the Hungarian economy expected for this year, the government’s 2015 deficit target of 2.4% of the GDP is likely to be met (Charts 1–2, Table 1).
• In February 2015, yields in the 6-month and longer segments of the yield curve rose: secondary market 5-year and 10-year bond yields rose by 9 and 12 basis points to 2.47% and 2.91%, respectively, in February. The reference yield of 3-month discount treasury bonds melted from 1.70% to 1.58% (-12 basis points), resulting in a steeper yield curve overall (Chart 4). 10-year yields increased throughout the region in the previous month (Romania: +15 bp, Poland: +17 bp, Czech Republic: +23 bp).
Table 1: The revenues of the central government and the social security funds by main groups
HUF billion 2014 2015
total income (esti-
mation)
January
% of yearly reve-nues
yearly revenue target
January
% of yearly
revenuetarget
CENTRAL GOVERNMENT 11 800.9 691.1 5.9% 10 890.7 754.9 6.9%
Taxes imposedon corporations 1 305.1 81.5 6.2% 1 306.0 86.1 6.6%
Corporate income tax 394.8 31.8 8.1% 341.4 30.7 9.0%
Taxes imposed on SMEs 151.7 5.9 3.9% 156.5 6.4 4.1%
Special taxes on banks and branches 205.9 0.0 0.0% 204.8 1.3 0.6%
Taxes imposedon consumption 4 335.9 313.3 7.2% 4 396.7 328.2 7.5%
Value added tax 3 035.6 210.8 6.9% 3 172.4 211.0 6.7%
Excise tax 918.9 64.8 7.1% 913.5 78.6 8.6%
Financial transaction tax 277.9 29.7 10.7% 206.2 30.6 14.8%
Taxes imposedon households 1 753.8 164.6 9.4% 1 806.6 173.6 9.6%
Personal income tax 1 589.1 156.0 9.8% 1 639.7 163.3 10.0%
Pension Fund 3 124.5 277.0 8.9% 3 024.6 270.1 8.9%
Health Care Fund 1 907.1 168.5 8.8% 1 910.8 170.1 8.9%
Sources: Ministry for National Economy, HCSO, MFB
-73.2 -65.0 -54.3 -62.2 -58.7 -93.3 -104.0 -111.6-42.5 -38.8 -42.4
-55.6-75.1
-59.9 -72.7-48.9
-239.5 -230.6 -267.6 -204.6-190.4 -148.7 -164.6 -126.3
-339.5-294.8
-319.7 -434.2-335.5 -415.5
-458.6 -514.4
-57.6-54.5
-53.3-52.8
-69.1-67.,8
-57.9 -58.0
96.6 75.8133.4
130.3196.2
154.2 113.9 132.4
212.4 217.1213.4
172.2154.0
169.4 164.6 173.6
341.1 295.8325.3
330.3365.9
292.8 313.3328.2
70.174.0
49.356.9
72.1
64.0 81.586.1
-10.5 11.6 38.8 -110.8 85.3 -90.7 -166.6 -104.4
-900-800-700-600-500-400-300-200-100
0100200300400500600700800900
2008 2009 2010 2011 2012 2013 2014 2015
Payment of economicorganizationsTaxes in consumption
Payment of households
Central budgetary institutions
Other revenues
Family benefits, socialsubsidiesPayments of central budgetaryinstitutionsTransfers to generalgovernment subsystemsDebt service
Other expenditures
Balance of central budget
value of balance
Chart 1: Revenues and expenditures ofcentral budget in January (billion HUF)
Sources: Ministry for National Economy, HCSO, MFB
0
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35
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poin
t
Hungary Czech Republic Poland Romania VIX index (RHS)
Chart 4: Yields on 10-year government bonds
Sources: Government Debt Management Agency, Reuters, CBOE, MFB
increasing global risk appetite1,0%1,5%2,0%2,5%3,0%3,5%4,0%4,5%5,0%5,5%6,0%6,5%
1,0%1,5%2,0%2,5%3,0%3,5%4,0%4,5%5,0%5,5%6,0%6,5%
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3-month 6-month 12-month 5-year 10-year CBH base rate
Chart 3: Reference yields on Hungarian government securites
Sources: Government Debt Management Agency, CBH, MFB
-25%
0%
25%
50%
75%
100%
125%
150%
175%
-25%
0%
25%
50%
75%
100%
125%
150%
175%
1 2 3 4 5 6 7 8 9 10 11 12
20082009201020112012201320142015
Chart 2: The proportion of cumulated central government budget deficit in ratio of the yearly target
Sources: Ministry for National Economy, HCSO, MFB
