MACROECONOMIC AND FINANCIAL MARKET DEVELOPMENTS - 2023 FEBRUARY BACKGROUND MATERIAL - MNB
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MACROECONOMIC AND
FINANCIAL MARKET DEVELOPMENTS
BACKGROUND MATERIAL
TO THE ABRIDGED MINUTES
OF THE MONETARY COUNCIL MEETING
OF 28 FEBRUARY 2023
FEBRUARY
2023MAGYAR NEMZETI BANK
Time of publication: 2 p.m. on 14 March 2023
The background material ‘Macroeconomic and financial market developments’ is based on information
available until 22. February 2023.
Article 3 (1) of the MNB Act (Act CXXXIX of 2013 on the Magyar Nemzeti Bank) defines achieving and
maintaining price stability as the primary objective of the Magyar Nemzeti Bank. The MNB’s supreme
decision-making body is the Monetary Council. The Council convenes as required by circumstances, but
at least twice a month, according to a pre-announced schedule. At the second scheduled meeting each
month, members consider issues relevant to decisions on interest rates. Abridged minutes of the
Council’s rate-setting meetings are released regularly, before the next policy meeting takes place. As a
summary of the analyses prepared by staff for the Monetary Council, the background material presents
economic and financial market developments, as well as new information which has become available
since the previous meeting.
The abridged minutes and the background materials to the minutes are available on the MNB’s
website at:
http://www.mnb.hu/en/monetary-policy/the-monetary-council/minutes
2 MACROECONOMIC AND FINANCIAL MARKET DEVELOPMENTS • FEBRUARY 2023MACROECONOMIC DEVELOPMENTS
Table of contents
1. Macroeconomic developments............................................................................................................ 4
1.1 Global macroeconomic environment ........................................................................................ 4
1.2 Real economic developments in Hungary ................................................................................. 6
1.2.1 Economic growth ................................................................................................................... 6
1.2.2 Employment ........................................................................................................................... 7
1.3 Inflation and wages......................................................................................................................... 9
1.3.1 Wages ..................................................................................................................................... 9
1.3.2 Inflation developments .......................................................................................................... 9
1.4 Fiscal developments ................................................................................................................ 11
1.5 External balance developments .............................................................................................. 12
2. Financial markets................................................................................................................................ 13
2.1 International financial markets ............................................................................................... 13
2.2 Developments in domestic money market indicators ............................................................ 15
3. Trends in lending ............................................................................................................................. 16
MACROECONOMIC AND FINANCIAL MARKET DEVELOPMENTS • FEBRUARY 2023 3MAGYAR NEMZETI BANK
1. Macroeconomic developments
1.1. Global macroeconomic environment
In 2022 Q4, economic growth in major economies slowed down further, while in most EU countries GDP growth was more
favourable than expected. International confidence indices improved slightly in January but remained at a low level.
In 2022 Q4, economic growth in the European Union,
the euro area, China and the United States was 1.8, 1.9,
2.9 and 1.0 percent, respectively year on year. In an
international comparison, of the 22 EU countries
publishing preliminary data for Q4, annual GDP growth
was the highest in Ireland (+15.7 percent) and in Romania
(+5.0 percent). Economic performance fell in Lithuania (-
0.4 percent) and in Sweden (-0.6 percent). The economy
of Germany – Hungary’s main trading partner – expanded
by 1.1 percent. On a quarter-on-quarter basis the output
of nine Member States decreased, with the economy of
Chart 1 Business climate indices in Hungary’s export markets Poland (-2.4 percent) registering the largest decline. The
euro area grew by 0.1 percent, while EU-27 output
balance balance
3 30 remained unchanged over a quarter.
2 20
1 10 Monthly production indicators show a mixed picture. In
0 0 December 2022, industrial production in the US grew by
-1 -10 1.6 percent, the lowest since March 2021, and in China it
-2 -20 rose by 1.3 percent. In December, the euro area
-3 -30 registered a year-on-year decline of 1.7 percent. In
-4 -40 December, the volume of retail sales grew by 6 percent
-5 -50 in the USA, while fell by 1.8 percent in China and 2.8
-6 -60 percent in the euro area, in year-on-year terms.
2007 2010 2013 2016 2019 2022
In January, forward-looking confidence indicators rose
OECD BCI (weighted average of our export markets)
Ifo (right-hand scale) slightly in the euro area, but remained at a low level
(Chart 1). Business sentiment and consumer confidence
Source: OECD, Ifo showed a slight improvement in the euro area based on
both the Economic Sentiment Indicator (ESI) and the
Purchasing Manager’s Index (PMI). Compared with the
previous month, the US Purchasing Manager Index
declined slightly in January, and it is still below the
threshold (50 points), while in China it improved by 10.3
points to 52.9.
International labour market trends were unchanged. In
January, unemployment rate in the United States was 3.4
percent, while in the euro area it stood at 6.6 percent in
December.
Inflation in the United States slightly decreased to 6.4
percent. By contrast, in China, it rose from 1.8 percent
in December to 2.1 percent in January.
4 MACROECONOMIC AND FINANCIAL MARKET DEVELOPMENTS • FEBRUARY 2023MACROECONOMIC DEVELOPMENTS
Based on preliminary data, in January inflation in the
euro area fell from 9.2 percent to 8.5 percent in annual
Chart 2 Developments of inflation in European Union terms, while core inflation remained at 5.2 percent. The
percent percent preliminary inflation figure was lower than analysts’
30 30
expectations of 8.9 percent, while core inflation slightly
25 25
exceeded the analyst’ consensus of 5.1 percent. The rise
20 20
in HICP inflation was most strongly connected to food
15 15
10 10 prices and energy items in January.
5 5 Based on preliminary data from the 27 EU countries,
0 0
inflation declined or stagnated in 18 countries, while it
USA
Romania
Finland
Hungary
Latvia
Austria
France
Poland
Croatia
Italy
Denmark
Germany
Greece
Spain
Netherlands
Bulgaria
Ireland
Malta
Slovakia
Slovenia
China
Estonia
Lithuania
Czechia
Portugal
Belgium
Ciprus
Luxembourg
Sweden
European Union
Eurozone
rose in 9 countries in January. Hungary had the highest
inflation rate among the EU countries in January, while
the Baltic countries also saw an annual inflation of around
20 percent. In the region, based on the data of the
January 2023 December 2022 national statistical offices, prices rose by 17.5 percent in
the Czech Republic, 17.2 percent in Poland, 15.1 percent
Note: HICP and CPI rates.
in Romania and 14.9 percent in Slovakia year-on-year
Source: Eurostat
(Chart 2).
MACROECONOMIC AND FINANCIAL MARKET DEVELOPMENTS • FEBRUARY 2023 5MAGYAR NEMZETI BANK
1.2. Real economic developments in Hungary
Following the favourable trends at the beginning of the year, Hungary’s GDP growth decelerated to 0.4 percent in Q4, while
on a quarter-on-quarter basis a decline of 0.4 percent was observed. Industry and market services were the largest
contributors to the year-on-year growth, while agriculture restrained growth. In 2022 as a whole, Hungary’s economic
performance rose by 4.6 percent, outstripping the EU average. In the last month of 2022, the average number of employees
in the 15-74 age group was 4,704,000. In the period of October–December, 15,000 more people worked in Hungary than
in the same period last year. The unemployment rate stood at 3.9 percent in December.
1.2.1. Economic growth
In December 2022, industrial production rose by 2.0
percent year on year. Based on the seasonally and calendar
adjusted data, the volume of production increased by 3.8
percent on a monthly basis (Chart 3). Production fell in most
of the manufacturing subsectors but significantly increased
Chart 3 Developments in industrial production in the automotive industry and battery manufacture. The
output of the automotive industry, representing the largest
2015 = 100 percent
130 30 share, increased by 34.5 percent compared to the low base
120 20 of the previous year. Production of electrical equipment,
including battery production and the manufacture of
110 10 electric motor, rose by 61.6 percent. Following a previous
100 0 increase, manufacture of computers and electronic
products has been falling for two months, registering a
90 -10
decline of 8.1 percent in December. Among the
80 -20 manufacturing subsectors, the volume of chemical
70 -30 substances production (-40.2 percent), petroleum refining (-
2015 2016 2017 2018 2019 2020 2021 2022 28.9 percent), metal industry production (22.6 percent),
Monthly change (right-hand scale) rubber, plastic and non-metal production (-13.6 percent)
Seasonally adjusted value and wood and paper production (-12.6 percent) declined to
Source: MNB calculation based on HCSO data the largest degree compared to December last year.
In December 2022, the volume of construction output
declined by 3.9 percent year on year. The construction
of buildings increased by 1.1 percent, while
construction of other structures decreased by 12.7
percent, in year-on-year terms. Based on seasonally
and working-day adjusted data, construction output
fell by 3.7 percent compared to the previous month.
The volume of new contracts was down by 35.9
percent from the high base in December 2021. Within
that, new contracts for the construction of buildings
and of other structures declined by 4.5 percent and by
59.3 percent, respectively, year on year.
In December 2022, retail sales volume fell by 3.9 percent
year on year; while excluding fuel trade, turnover declined
by 4.4 percent based on data after adjusting for the
calendar effect. In December, turnover fell in almost half of
the individual product groups. Retail sales volume in food
stores and groceries, representing the largest weight, fell by
8.3 percent. On the other hand, sales of motor vehicle and
6 MACROECONOMIC AND FINANCIAL MARKET DEVELOPMENTS • FEBRUARY 2023MACROECONOMIC DEVELOPMENTS
vehicle parts stores rose by 3 percent, and fuel stations also
saw a moderate (+1.3 percent) growth in turnover in
December, which was presumably largely attributable to
the lifting of the cap on fuel prices.
Based on preliminary data, trade balance showed a deficit
of EUR 154 million in December 2022. The balance
improved by EUR 204 million, compared to the same period
of the previous year. The balance, adjusted for VAT
residents, remained negative, with a deficit of EUR 715
million in December. In December, goods exports and
imports rose by 12.3 percent and 9.9 percent, respectively,
in euro terms, year on year. In November 2022, terms of
trade deteriorated by 5.3 percent in an annual comparison,
which is primarily contributed by mineral fuels.
In the first month of this year most of the high frequency
data declined. Based on online cash register data, real
turnover in January declined by 4.5 percent year on year. Air
passenger traffic and goods traffic declined further (-7
percent and -9 percent, respectively) according to data
received so far. Electricity load data fell by 21 percent. The
number of housing market transactions declined by 47
percent, according to data available to date. Cinema
attendance and road passenger traffic remained broadly
unchanged. Catering turnover rose by almost 30 percent
due to the low base registered in the same period of last
year. Google searches for the term “unemployment
benefit” rose by 21 percent.
1.2.2. Employment
Based on Labour Force Survey (LFS) data, the average
Chart 4 Number of persons employed and the number of employed in the 15-74 age group was 4,704,000
unemployment rate in December 2022. In the period of between October and
thousand persons December 2022, the average number of the employed was
4 800 percent 16 4,702,000, exceeding the figure of previous year’s
4 600 14
corresponding period by 15,000 (Chart 4). In October–
4 400 12
December, on average, the number of employed in the
4 200 10
4 000 8 primary labour market and of those working abroad rose by
3 800 6 16,000 and 13,000, respectively, while the number of
3 600 4 fostered employees fell by 14,000, compared to the same
3 400 2 period of the previous year.
3 200 0
In December, the number of the unemployed was 190,000,
2007
2008
2010
2011
2013
2014
2016
2017
2019
2020
2022
which exceeded the figure of December 2021 by 11,000
Employment (thousand persons) persons; and as a result, the unemployment rate stood at
Unemployment rate (right-hand scale) 3.9 percent, overall. Based on seasonally adjusted data, in
December the number of the unemployed showed a slight
Note: The graph shows seasonally adjusted moving averages.
decrease compared to November. Based on the data
Source: HCSO
published by the National Employment Service the number
of registered jobseekers in Hungary was 230,000 (-8,000 on
an annual basis) in December 2022 and 244,000 (-5,000 on
MACROECONOMIC AND FINANCIAL MARKET DEVELOPMENTS • FEBRUARY 2023 7MAGYAR NEMZETI BANK
an annual basis) in January 2023. Based on seasonally
adjusted data, the number of the registered jobseekers in
January 2023 remained unchanged compared to December,
and it is still below the number measured in the months
before the outbreak of the coronavirus pandemic.
Labour market remains historically tight (Chart 5). In 2022
Q3, unsubsidised available vacancies amounted to 63,000 in
the private sector, representing an increase of 8 percent
year-on-year and a decrease of 10 percent on the previous
quarter. Labour demand declined quarter-on-quarter both
in market services and manufacturing. Manufacturing job
vacancies fell short of the figure registered in Q2 by 1,400.
Chart 5 Developments in labour market tightness indicator
In 2022 Q3, job vacancies amounted to 37,400 in the services
percent percent
50 50 sector, down by 3,300 compared to the previous quarter.
45 45 Within the services sector, job vacancies in the information
40 40 and communication sector and in professional and scientific
35 35
activities declined by 1,400 and 1,000 respectively. Labour
30 30
25 25 demand slightly declined quarter on quarter in tourism.
20 20 Within the public sector job vacancies remained practically
15 15 unchanged in healthcare, education and public
10 10 administration compared to the second quarter.
5 5
0 0
2007 2009 2011 2013 2015 2017 2019 2021
Vacancies in the private sector in percentage
of LFS unemployed
Note: Quarterly data.
Source: National Employment Service, HCSO
8 MACROECONOMIC AND FINANCIAL MARKET DEVELOPMENTS • FEBRUARY 2023MACROECONOMIC DEVELOPMENTS
1.3. Inflation and wages
In January 2023, annual inflation was 25.7 percent. Incoming data was within the forecast range of the December Inflation
Report. Core inflation stood at 25.4 percent, and core inflation excluding indirect tax effects was 25.3 percent. In annual
terms, average regular wages (excluding bonuses) rose by 20.2 percent in the national economy, and by 19.4 percent in the
private sector, respectively, in November 2022.
1.3.1. Wages
In November 2022, gross average wages in the private
Chart 6 Dynamics of average earnings in the private sector sector rose by 18.7 percent year on year. The degree of
bonus payments exceeded the historical average for
percent percent
20 20 November. Average regular earnings (excluding bonuses)
18 18 rose by 20.2 percent in annual terms in the overall
16 16
14 14 economy, and by 19.4 percent in the private sector,
12 12 respectively.
10 10
8 8 According to seasonally adjusted data, growth in both
6 6 gross average wages and regular average wages
4 4
accelerated in the private sector compared to the
2 2
0 0 previous month (Chart 6). In the private sector wage
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
dynamics in manufacturing outstripped that in market
services. Annual wage dynamics were over 10.0 percent
Seasonally adjusted regular average wages in most sectors. In November, based on raw data, wages
Seasonally adjusted gross average wages in manufacturing were higher by 19.8 percent year-on-
Source: MNB calculation based on HCSO data year. In market services, HCSO registered a growth of 18.6
percent. Gross wages in construction and trade rose by
14.1 percent and 18.0 percent, respectively, in year-on-
year terms.
1.3.2. Inflation developments
In January 2023, annual inflation was 25.7 percent (Chart
Chart 7 Decomposition of inflation
7). The incoming data are in line with the forecast range
26 percentage points percent 26 communicated in the December Inflation Report. Core
24 24 inflation stood at 25.4 percent, and core inflation
22 22
20 20 excluding indirect tax effects was 25.3 percent.
18 18
16 16 Compared to the previous month, inflation increased by
14 14
12 12 1.2 percentage points, mainly driven by higher fuel prices.
10 10
8 8 On a monthly basis, core inflation increased by 0.6
6 6
4 4 percentage points. The growth of 0.5 percentage points in
2 2
0 0 core inflation is almost entirely attributable to market
-2 -2
services. Market services inflation was 16.6 percent, while
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
the annual increase in industrial goods prices was 19
Other percent.
Primary effects of government measures
Food and energy
Inflation (right-hand scale)
Source: MNB calculation based on HCSO data
MACROECONOMIC AND FINANCIAL MARKET DEVELOPMENTS • FEBRUARY 2023 9MAGYAR NEMZETI BANK
The monthly increase in core inflation, which better
Chart 8 Measures of underlying inflation indicators reflects market developments and excludes processed
percent food prices, was 1.6 percent. Underlying inflation
percent
26 26 indicators capturing persistent trends, i.e. core inflation
24 24
22 22 excluding processed food and inflation of sticky price
20 20 products and services, increased compared to the
18 18
16 16 previous month (Chart 8).
14 14
12 12
10 10
8 8
6 6
4 4
2 2
0 0
2012 2013 2015 2016 2018 2019 2021 2022
Core inflation excluding indirect tax effects
Core inflation excluding processed foods
Sticky Price Inflation
Note: Core inflation excluding processed food corresponds, with
unchanged content, to the former demand sensitive inflation
measure.
Source: MNB calculation based on HCSO data
10 MACROECONOMIC AND FINANCIAL MARKET DEVELOPMENTS • FEBRUARY 2023MACROECONOMIC DEVELOPMENTS
1.4. Fiscal developments
The balance of the general government’s central sub-sector showed a deficit of HUF 144 billion in January 2023. Monthly
revenues and expenditures of the central sub-sector exceeded the figure seen in January 2022 by HUF 434 billion and by
roughly HUF 729 billion, respectively.
Chart 9 Intra-year cumulative cash balance of the central In January 2023, the balance of the general
government budget government’s central sub-sector showed a deficit of
1000 HUF billion HUF billion 1000 HUF 144 billion, which falls short of the HUF 151 billion
monthly surplus in January 2022 by HUF 295 billion
0 0
(Chart 9).
-1000 Appropriation -1000
of 2023 In January, revenues of the central sub-sector
-2000 -2000
exceeded the previous year’s value by HUF 434 billion.
-3000 -3000
Tax and contribution revenues rose by HUF 403 billion,
-4000 -4000 i.e. by 21 percent year-on-year, mostly due to a
-5000 -5000 significant increase in payments by households and in
-6000 -6000 consumption taxes.
M10
M11
M12
M1
M2
M3
M4
M5
M6
M7
M8
M9
Expenditures exceeded previous year’s figure by
2021 2022 2023 almost HUF 729 billion. HUF 348 billion of the excess
Source: Budget Act of 2023, Hungarian State Treasury expenditures was caused by to the purchase of an
equity stake in Vodafone. An additional increase in
expenditures compared to last January was
attributable to the fact that based on a Government
Decision HUF 173 billion was disbursed from normative
and special subsidies to cover energy costs, while net
interest expenditures rose by HUF 123 billion.
MACROECONOMIC AND FINANCIAL MARKET DEVELOPMENTS • FEBRUARY 2023 11MAGYAR NEMZETI BANK
1.5. External balance developments
In December 2022, the current account deficit was EUR 694 million, while net borrowing amounted to EUR 726 million.
According to financial account data, in parallel with the increase in net foreign direct investments net external debt
significantly grew.
Chart 10 Structure of net lending (unadjusted transactions) In December 2022, the current account deficit was EUR 694
million, while net borrowing amounted to EUR 726 million
6 EUR billion EUR billion 6
(Chart 10). Current account deficit significantly declined
5 Net borrowing - inflow of funds 5
4 4
3 3 compared to previous month, which was primarily
2 2
1 1 attributable to the material improvement in the goods
0 0
-1 -1 balance. Goods deficit fell short of the figure registered in
-2 -2
-3 -3 November by almost EUR 1 billion, which was mostly
-4 Net lending - outflow of funds -4
-5 -5 attributable to the adjustment of the previous high level of
Nov
Q3
2019 Q1
2012 Q1
Q3
2013 Q1
2014 Q1
Q3
2015 Q1
Q3
2016 Q1
Q3
2017 Q1
Q3
2018 Q1
Q3
Q3
2020 Q1
Q3
2021 Q1
Q3
2022 Q1
Q3 imports, with minor contribution by the better energy
balance resulting from lower gas price. In December,
Transactions related to derivatives services balance surplus corresponded to that seen in
Debt-type financing November, while the monthly income balance deficit slightly
Non-debt type financing increased compared to November. Transfer balance surplus
Net borrowing (financial account)
Net borrowing (current and capital account) – under unchanged EU transfers – declined to a smaller
Note: Positive values indicate net borrowing (inflow of funds), while degree than a year ago.
negative values indicate net lending (outflow of funds). The
According to financial account data, net external debt rose
fundamental development of the debt from an economic viewpoint
significantly as net foreign direct investments increased.
is not influenced by the conversion between unallocated and bullion
balances, thus this effect has been excluded. The rise of some EUR 0.5 billion in net foreign direct
Source: MNB investments was primarily linked to reinvested earnings. Net
external debt rose by EUR 1.8 billion due to transactions,
which was attributable to a substantial rise in the
government’s indicator, while net external debt of banks
and corporations declined.
12 MACROECONOMIC AND FINANCIAL MARKET DEVELOPMENTS • FEBRUARY 2023FINANCIAL MARKETS
2. Financial markets
2.1. International financial markets
Since the previous interest rate decision, global investor sentiment has primarily been shaped by expectations for the
world’s leading central banks’ monetary policy, incoming macroeconomic data and the European energy crisis. Long-term
yields generally rose in developed markets and in the CEE region. Leading stock indices were mixed.
Financial market sentiment has been volatile since the
Chart 11 Developed market equity indices, the VIX index and previous interest rate decision. Of the risk indicators, the
the EMBI Global Index VIX index, the key measure of equity market volatility,
rose overall compared to the level registered at the
percent basis point
100 800 previous interest rate decision by 2.2 percentage points to
80 725 22.1 percent, while in emerging markets the EMBI Global
60 650 bond market premium increased slightly by 6 basis points.
40 575 The MOVE index (measure of the developed bond market
20 500 volatility) rose by 7 basis points to 120 basis points (Chart
0 425 11).
-20 350
Leading stock indices were mixed. Over the period, both
-40 275
the US S&P and the Dow Jones fell by 0.5 and 1.8 percent,
-60 200
respectively. Out of the leading European stock market
7-Feb
21-Feb
24-Jan
Apr-20
Dec-21
May-22
Sep-20
Oct-22
Jan-19
Jun-19
Nov-19
Feb-21
Jul-21
indices, the German DAX and the French CAC40 rose by
1.8 and 3.3 percent, respectively. From the Asian indices,
the Japanese Nikkei fell by 0.7 percent, while the Shanghai
S&P500 VIX DAX EMBI Global (rigth-hand scale)
stock market index rose by 0.8 percent compared to the
Source: Bloomberg level seen at the previous interest rate decision. Overall,
the developed and emerging market MSCI composite
indices decreased by 0.6 and 4.2 percent, respectively.
Chart 12 Evolution of developed market FX exchange rates
from January 2019 The dollar appreciated against the major currencies
(Chart 12). The dollar exchange rate appreciated against
percent percent
15 15 the Japanese yen by 3.6 percent, against the euro by 2.2
10 10 percent, against the British pound by 2.0 percent, against
5 5
0 0 the Swiss franc by 0.5 percent and against the Chinese
-5 -5 renminbi by 1.6 percent. The euro-dollar exchange rate
-10 -10
-15 -15 gradually moved closer to parity during the period under
-20 -20 review, and by the end of the period it was close to 1.06.
-25 -25
-30 -30
-35 -35
-40 -40
Apr-20
Dec-21
May-22
Oct-22
Jan-19
Jun-19
Nov-19
Feb-21
Sep-20
Jul-21
24-Jan
07-Feb
21-Feb
USDEUR USDCHF USDGBP USDJPY
Long-term yields generally rose in developed markets
Note: Positive values indicate the strengthening of the variable
and in the CEE region (Chart 13). The ten-year US and
(second) currency. German yield rose by 50 and 37 basis points, respectively,
Source: Reuters and thus the US yield closed the period at 3.95 percent,
while the German one at 2.53 percent. Portuguese and
Spanish yields were up by 41 and 42 basis points, and
Italian and Greek yields by 18 and 36 basis points,
MACROECONOMIC AND FINANCIAL MARKET DEVELOPMENTS • FEBRUARY 2023 13MAGYAR NEMZETI BANK
Chart 13 Yields on developed market long-term bonds respectively. Yields on 10-year government bonds in the
countries of the CEE region also rose: Polish, Romanian
percent percent
5 5 and Czech yields were down (sic orig.) by 71, 42 and 52
basis points, respectively, while the Hungarian yields are
4 4
141 basis points higher than at the January rate decision.
3 3
Since the previous interest rate decision oil prices have
2 2 decreased: the price of Brent crude oil was down by 2.4
1 1 percent to USD 83 per barrel, while the US benchmark
WTI oil price fell by 4.7 percent to USD 76 per barrel (Chart
0 0
14). Fall in gas prices continued, although its rate declined
-1 -1 from 40 percent seen in January to 17 percent (Chart 14).
Apr-20
21-Feb
Dec-21
May-22
24-Jan
07-Feb
Jan-19
Jun-19
Oct-22
Nov-19
Jul-21
Sep-20
Feb-21
As a result, in this declining trend which started at the end
of August 2022, gas prices fell to levels last seen at the end
USA Germany Japan UK of August 2021. Currently, gas storage facilities in Europe
Source: Bloomberg are filled up to 65 percent on average and their utilisation
was over the average capacity typical for this period of the
Chart 14 Developments in oil and gas prices since January
year, which was also due to milder winter weather in the
2021
region and stronger imports of liquefied natural gas. The
USD/barrel EUR/thm price of industrial metals declined, with the price of
175 350
150 300 copper, zinc and aluminium falling by 3, 8 and 7 percent,
125 250 respectively. The Bloomberg commodity price index,
100 200 covering the entire commodity market, declined by 4.3
75 150 percent over the period.
50 100
25 50
0 0
2022.01.
2021.01.
2021.03.
2021.05.
2021.07.
2021.09.
2021.11.
2022.03.
2022.05.
2022.07.
2022.09.
2022.11.
2023.01.
Oil (WTI)
Oil (Brent)
Gas (Dutch exchange, right-hand scale)
Source: Bloomberg
14 MACROECONOMIC AND FINANCIAL MARKET DEVELOPMENTS • FEBRUARY 2023FINANCIAL MARKETS
2.2. Developments in domestic money market indicators
Unlike other exchange rates in the CEE region, the forint has appreciated by 1.1 percent against the euro since the January
interest rate decision. The government securities yield curve shifted upwards. The 3-month BUBOR rose by 28 basis points
to 16.27 percent.
Chart 15 EUR/HUF exchange rate and the implied Since the interest rate decision in January, the forint has
volatility of exchange rate expectations appreciated against the euro by 1.1 percent (Chart 15).
Of the currencies of the CEE region, the Czech koruna
EURHUF percent
440 28 appreciated against the euro by 0.6 percent, while the
420 24 Polish zloty and the Romanian leu essentially remained
400 20 unchanged against the euro (Chart 18).
380 16 The 3-month BUBOR, relevant for monetary policy
360 12 transmission, rose by 28 basis points to 16.27 percent
340 8 since the last interest rate decision.
320 4
The government securities yield curve shifted upwards
300 0
(Chart 16). At the 1-year section of the yield curve a rise of
Apr-20
May-22
Dec-21
Jan-19
Jun-19
Oct-22
Nov-19
Jul-21
Sep-20
Feb-21
7-Feb
24-Jan
21-Feb
138 basis points was registered, while on the medium and
longer maturities yields rose by an average of 140 and 120
EURHUF implied volatility (right-hand scale)
basis points, respectively.
Source: Bloomberg
Government bond auctions held by the Government
Debt Management Agency since the last interest rate
Chart 16 Shifts in the spot government yield curve decision were characterised by an adequate demand. At
the beginning of the period under review, the
percent percent
16 16 Government Debt Management Agency typically
14 14 accepted higher volume of government bonds than
12 12 announced, while at the auctions of shorter-term discount
10 10 Treasury bill auctions the volume of securities sold from
8 8 time to time were below the offered volume. Average
6 6 yields mostly moved up both on Treasury bills and on
4 4 government bonds.
2 2
0 0 Non-residents' holdings of forint government securities
0 1 2 3 4 5 6 7 8 9 10 decreased. Non-residents’ holdings in forint government
year securities decreased by HUF 102 billion to HUF 6,570
20-02-2023 13-10-2022 24-01-2023 billion. The market share of forint government securities
held by non-residents declined to around 21.4 percent.
Source: MNB, Reuters
MACROECONOMIC AND FINANCIAL MARKET DEVELOPMENTS • FEBRUARY 2023 15MAGYAR NEMZETI BANK
3. Trends in lending
Reflecting a fall in forint loans by HUF 95 billion and a rise foreign currency loans by HUF 23 billion, outstanding loans to
non-financial corporations fell by HUF 72 billion in December 2022, due in part to the year-end deleveraging of the balance
sheet. In December, outstanding borrowing by households increased by HUF 58 billion as a result of disbursements and
repayments combined, reducing the annual growth rate to 6.3 percent from 6.4 percent last month.
Chart 17 Net borrowing by non-financial corporations Reflecting a fall in forint loans by HUF 95 billion and a rise
HUF billions percent foreign currency loans by HUF 23 billion, outstanding loans
400 20
to non-financial corporations fell by HUF 72 billion in
300 15
December 2022, due in part to the year-end deleveraging
200 10
of the balance sheet. (Chart 17). As a result, the annual
100 5
growth rate slowed to 13.8 percent from 16.5 percent
0 0 registered in previous month. Including bond transactions in
-100 -5 credit institutions’ balance sheet, the annual growth rate in
-200 -10 the month was 14.6 percent. Credit institutions extended
Oct-20
Oct-22
Apr-20
Apr-21
Apr-22
Dec-19
Dec-20
Oct-21
Dec-21
Dec-22
Aug-20
Aug-21
Aug-22
Jun-20
Jun-21
Jun-22
Feb-20
Feb-21
Feb-22
new loans in the amount of HUF 312 billion, down by 31
percent from the same period last year. The volume of the
Transactions - FX SME sector’s new contracts fell short of the disbursements
Transactions - HUF
registered last December by 42 percent, which is partly the
Total - seasonally adjusted
Year-on-year growth rate (right-hand scale) result of the volume of new contracts under the Széchenyi
Source: MNB
Card Programme falling short of expectations.
In December, outstanding borrowing by households
increased by HUF 58 billion as a result of disbursements
and repayments combined, reducing the annual growth
Chart 18 Net borrowing by households rate to 6.3 percent from 6.4 percent last month (Chart 18).
Disbursements of new household loans amounted to HUF
200 HUF billions percent 20
167 billion during the month, which was 27 percent lower
150 15 than in the same period of the previous year. The decline in
disbursements impacted almost all loan products, with the
100 10
exception of prenatal baby support loans, which registered
50 5 a significant growth due to the demand brought forward
0 0 connected to the original plans to phase out the scheme. In
-50 -5 parallel with the rise in interest rate on loans, average loan
amounts of housing loan contracts declined further.
Apr-20
Apr-21
Apr-22
Dec-22
Dec-19
Dec-20
Dec-21
Aug-20
Oct-20
Aug-21
Oct-21
Aug-22
Feb-20
Jun-20
Jun-21
Jun-22
Oct-22
Feb-21
Feb-22
Transactions - Consumer and other loans
Transactions - Housing loans
Total - seasonally adjusted
Year-on-year growth rate (right-hand scale)
Source: MNB
16 MACROECONOMIC AND FINANCIAL MARKET DEVELOPMENTS • FEBRUARY 2023TRENDS IN LENDING
Chart 19 Developments in corporate and household credit
In December 2022, the smoothed interest rate spread on
spreads
forint corporate loans stood at 2.29 percent, following a
5 percentage point percentage point 5 rise of 0.31 percentage points compared to the previous
4 4
3 3 month. (Chart 19). After a rise of 1.16 percentage point, the
2 2 average APR-based spread on housing loans with interest
1 1
0 0 rate fixation periods longer than 1 year and up to 5 years
-1 -1
-2 -2 increased to 4.17 percentage points in December, while the
-3 -3
-4 -4 spread on products with interest rate fixation periods of
-5 -5 more than 5 years rose by 0.2 percentage point and stood
-6 -6
at -0.98 percentage points at the end of the period under
Aug-21
Dec-19
Dec-20
Dec-21
Dec-22
Apr-20
Aug-20
Apr-21
Jun-20
Oct-20
Jun-21
Oct-21
Apr-22
Aug-22
Jun-22
Oct-22
Feb-20
Feb-21
Feb-22
review. The spread is always calculated based on the
average reference rate prevailing in the month when the
Corporate HUF loans
Housing loans - up to 1 year fixation loan was disbursed, and thus due to the delayed nature of
Housing loans - 1 - 5 year fixation the repricing negative spreads may develop temporarily in
Housing loans - over 5 year fixation
certain sub-markets.
Note: In the case of corporate forint loans, the spread over the 3-
month BUBOR. In the case of housing loans with variable interest or
interest fixed for 1 year at the most, the 3-month BUBOR, while in
the case of housing loans fixed for over one year, the APR-based
margin above the relevant IRS.
Source: MNB
MACROECONOMIC AND FINANCIAL MARKET DEVELOPMENTS • FEBRUARY 2023 17You can also read
