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Hungaryʼs Q1 investments up more than 17%

The dynamic expansion in investments that characterized 2017 has persisted into the first quarter of 2018. The volume of investments in the current quarter exceeded the volume in Q1 2017 by 17.3%, with investment activity rising in most areas of the national economy, data from the Central Statistical Office (KSH) show.

In the first quarter of 2018 compared to the preceding quarter, the seasonally adjusted volume of investments rose by 4.1%.

In Q1 2018 compared to Q1 2017, the volume of investment activity rose by 17.3%, within which construction investments increased by 26.4%, while investments in machinery and equipment rose 10.4%.

Investment performance fell by 1.1% in the case of enterprises employing at least 50 persons and realizing more than half of investments, and grew by 65% in the case of budgetary units performing 12% of investments, compared to the same period of the previous year.

Investment activity rose in most sectors of the national economy. In sectors carrying the largest weight, the highest growth was recorded in the investment performance of real estate activities (45%), where home construction volume continued to expand, besides growing investments in the construction of facilities for lease (e.g. office buildings, commercial real estate, warehouses, etc).

The volume of investments in the sector of transportation and logistics grew by 9.4%, mainly due – besides road reconstruction – to the sharp increase in investments of enterprises operating in local and long-distance passenger transport.

In the sector of wholesale and retail trade, the performance of investments in the first quarter grew again (by 8.3%) – following the previous period’s temporary decrease – partially as a result of new store openings and modernization of existing ones.

Manufacturing investment stagnates

Developments in manufacturing (realizing three-tenths of investments in the national economy), following two years of significant expansion, essentially stagnated (-0.2%), attributable to both a high base and to certain high-volume projects being completed (e.g. in the electronics industry).

At the same time, investments in the manufacture of transport equipment – with a total share of around one-quarter of manufacturing investments in  the studied period – expanded significantly.

Investments in the agriculture, forestry and fishing sector – mainly as a result of a decreasing trend in the purchase of agricultural machinery by small enterprises – fell in the first quarter (-1.8%).

State-related investments played an important role in the growth of the whole national economy, expanding at a rate above average, primarily as a result of developments financed from EU funds.

The investment volume exceeded the previous year’s level in the areas of public administration, defense and compulsory social security (by 75%), in education (by 71%), and in healthcare and social work activities (by 74%). In arts, entertainment and recreation, the 68% growth was due to large-scale investments in sports and culture.

The volume of investments in IT and communications rose by 21% due to developments in digital network and cellular phone services.

In accommodation and food service activities, hotel construction and renovation played a role again – similarly to previous periods – in the 15% increase in the volume of investments.

In absolute terms, investments totaled HUF 1,261 billion in the first quarter of 2018, at current prices.

Full-year investment growth came to 16.7% in the year 2017.

A senior Ministry of Finance official was cited by state news wire MTI as saying on public television that the increase in investment volume significantly exceeded expectations, and that the government projects 13% investment growth for the full year.

TakarékBank analyst Gergely Suppan told MTI that the order stock of the construction industry and big investments underway augur double-digit investment growth again this year. TakarékBank  expects an increase for the full year of around 14%, he added.

Dávid Németh, chief analyst at K&H Bank, put full-year investment growth at 12%.

Investment data for the second quarter of 2018 will be published on August 30.