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Investments up 22% in Q3 2018

Investment volume in Hungary climbed 22.1% year-on-year in the third quarter of 2018, the Central Statistical Office (KSH) reported on Thursday. Growth accelerated from 15.3% in Q2, and 10.8% in Q1. In the first three quarters of 2018, investments grew 16.9% compared to the previous year’s high base.

The significant growth in investments in the third quarter was due principally to capacity-enlarging investments of enterprises, to projects financed from funds in the 2014–2020 EU budget cycle, and to the persistent expansion in residential and other real estate investments, said the KSH.

Construction-related investments - representing 58% of the total value of investments - were up 25.1% in Q3, while investments in machinery and equipment – representing approximately 40% of the total value of investments – rose 18.5%. In absolute terms, construction investments reached HUF 1,285.9 bln, while machinery investments added up to HUF 903.6 bln during the period.

The volume of developments grew by 13% in the case of enterprises employing at least 50 persons - which realized more than half of the investments – and by 35% in the case of budgetary units, these accounting for 15% of the investment performance.

Broken down by sectors of the national economy, investment activity grew in almost every sector. Of sectors carrying the largest weight, the greatest investment volume growth (41.8%) was recorded in the logistics sector (transportation and storage), mainly as a result of public road reconstruction, and continuing road, motorway and railway construction.

The investment volume of real estate activities, representing about 16% of investment outlay, rose 18.4%: besides continued expansion in residential construction, there was outstanding growth in investment in business facilities (office buildings, warehouses, etc).

Developments in manufacturing, realizing one quarter of investments in the national economy, grew a modest 3.2%. The investment volume grew to the greatest extent in the manufacture of electrical equipment, as a result of high international demand.

Investments in the manufacture of transport equipment – which represented one-quarter of manufacturing developments in the current period – were reduced.

Central government budget-related investments continued to play a key role in the third quarter, as well in the growth of investments in the national economy as a whole. In mainly publicly financed areas, investments typically grew at a rate above average, primarily as a result of developments financed from EU funds.

Investments in renewable energy sources played a part in the strong, 68% expansion of developments in the energy industry.

Hotel construction and renovation contributed once again – similarly to preceding periods – to outstanding growth of 26% in the area of accommodation and food service activities.

In the first three quarters of 2018, total investments reached HUF 5,321.4 bln in absolute terms. Manufacturing sector investments inched up 1.2% during the period, investments in the logistics sector rose 27.6%, and real estate investments increased 13.8%.

Investment data for the fourth quarter, and for 2018 as a whole, will be published by the KSH in February 2019.