Investments up 18.3% in third quarter

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In the third quarter of 2017, the expansion of investments in the national economy persisted, similarly dynamic to the growth in the first half of the year, according to data released by the Central Statistical Office (KSH). In the first three quarters, investments expanded by 22.6% compared to the low base a year earlier.

In absolute terms, investments came to HUF 1,596 billion in Q3. In the period Q1-Q3, investments totaled HUF 4,144 bln.

The volume of developments was 18.3% higher in Q3 2017 than in the equivalent period of the previous year. The growth was due to capacity-increasing investments of enterprises, works in connection with projects financed from funds in the 2014–2020 EU budget cycle, and a recovery in housing and other real estate investments, noted the KSH.

In the third quarter, investments in machinery and equipment rose by 20% year-on-year, while the volume of construction investments increased by 17%. 

Investment growth of 18% was recorded at enterprises employing at least 50 persons, realizing nearly six-tenths of the investment performance, and of 65% at budgetary units, realizing more than one-tenth of investment performance. 

Investment activity rose in all sections of the economy except for water and waste management, where the decrease was 9.6%.

Developments in manufacturing, representing 30% of investments in the national economy and continuing a permanent expansion lasting for one and a half years, grew by 14%. The largest contributor to the increase was investment in the manufacture of transport equipment, realizing three-tenths of investments in manufacturing.

Significant expansions in investment were also registered in the manufacture of electrical equipment, as well as computer, electronic and optical products. 

The volume of investment in real estate activities, considered as the second largest investor, rose by 19%, with growth realized in housing construction and renovation, as well as in commercial real estate developments. 

The volume of investment in transportation and storage, considered the third largest investor based on developments, also rose significantly (by 11%). Motorway, road and railway construction projects financed from EU funds grew, and enterprises engaged in transportation also increased their developments. 

In mostly publicly financed areas – the total share of which approximated one-tenth of investments – investments expanded at a rate above the average, primarily due to developments financed from EU funds. The volume of investments was 86% higher in education and 95% more in human health and social work activities than the low base one year earlier. 

The investment performance of the wholesale and retail trade increased by 15% in the third quarter, primarily as a result of upgrades and renovation work at retail chain stores. 

In arts, entertainment and recreation, the substantial (50%) expansion of investments in new tangible assets continued to be attributable to large-scale investments in primarily high-performance sports and culture.

In accommodation and food service activities, the largest contributors to the 22% rise in the volume of investments continued to be hotel construction and renovation, occurring in parallel with an increase in tourist numbers at accommodation establishments.

Varga attributes growth to investor-friendly measures

Minister for National Economy Mihály Varga was cited as saying by official government website kormany.hu that a combination of investor-friendly measures, such as the 9% corporate tax rate and lower payroll taxes, as well as the steadily improving business environment, has had a visible effect on investment, as Hungary’s attractiveness for capital investment has increased.

Varga noted that growth has also been driven by corporate capacity expansion projects and construction sector projects generated by the government’s housing program.

"The government is expecting the strong growth momentum to persist, as the positive trend is seen to be underpinned by development projects in both the private and public sectors," according to kormany.hu.

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