Road to “economic neutrality”: service exports

By: Trademagazin Date: 2024. 10. 07. 11:33

Analysts regularly deal with Hungary’s foreign trade balance and its impact on the economy, but mostly the product foreign trade balance is discussed. At the same time, it is also important to deal with another important component of the domestic foreign trade balance, the foreign trade balance of services, in the shadow of reindustrialization “plans”.

In 2020 and 2021, the export and import value of services stagnated due to closures caused by the coronavirus. Starting from 2022, in the case of services, the value of quarterly exports (+34%) increased faster than imports (23%). The largest player on both the export and import side is business services, and the sectors providing the largest export surplus are tourism and transport services.

The weakening of product exports (mainly machinery and transport equipment, as well as processed products) is a problem for the Hungarian economy. Fortunately, product imports moderated more, which has two components: falling energy prices and a decline in import volumes other than energy carriers. From Hungary’s point of view, the latter is a problem, as it is a sign of the slow growth of household consumption and the weakening of “import-intensive” companies producing for export.

Although the volume and total value of foreign trade in products far exceeds that of services, the importance of the latter is indisputable in the Hungarian foreign trade balance. The foreign trade balance of services had a surplus throughout the examined period, which played a major role in the fact that, with the exception of two quarters, the Hungarian foreign trade balance has been positive throughout since 2020 (in four of these quarters, it remained positive only due to services).