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Hungary investment volume falls 3.2% yr/yr in Q4 - extended

Year-on-year investment volume in Hungary dropped 3.2% in the Q4 of 2008, preliminary figures published by the Central Statistics Office (KSH) on Friday show. Drop in investments no surprise; decline set to continue – analysts.

2008 investment volume dropped 3.0% from 2007. In 2007, full-year investment volume inched up 0.3% after a 2% contraction in 2006.

Q4 investments rose a seasonally-adjusted 0.1% from Q3 after a similar rise in Q3 from Q2 and a 1.1% rise between the first and the second quarters. After a 1% drop in the Q1, investment volume has risen each quarter from the previous quarter.

Construction-type investments were down 0.9% yr/yr in Q4 and contracted 6.8% in the full year. Investment in machinery and equipment fell 5.8% in Q4 2008 from a year earlier, but rose in the whole year by 2.7% from 2007. In nominal terms, investments totaled HUF 1,835 billion in Q4 and came to HUF 4,791 billion last year.

Investments in manufacturing sectors continued to fall, declining 2.1% in the last quarter and 3.6% in the whole year as the result of a decrease in each quarter resulting from a high base in 2007. Manufacturing investment-volume jumped 23.9% in 2007.

Contrary to manufacturing industries, investments in the farm sector registered high growth from a low base throughout last year resulting in a 24.4% jump for the whole year, including a 21.7% hike in Q4 after a 25.6% rise in Q3.

Investments in the transport, storage and communication sector, which include road construction, dropped 1.9% in Q4 and 6.0% for all of 2008. Investments in the real-estate service sector, which includes the home-building industry, were down 2.4% in Q4 after a 3.6% rise in Q3 and fell 1.5% in the whole of 2008.

Investments in the health and education sector decreased 9.6% and 12.9%, respectively, in Q4 and 2.1% and 13.8% for all of 2008.

OTP Bank’s Győző Eppich said the latest investment data do not yet show a drastic fall because many of the investments were started before the marked worsening of the crisis in the autumn.

CIB Bank’s Mariann Trippon said companies in a recession either cut costs, by cutting staff or taking other steps, or they hold back on investments, explaining the drop shown by the data published on Friday. Ms Trippon said the 0.4 percentage point increase in unemployment to 8.4% in November-January, also published on Friday, came as little surprise in light of falling exports and weak domestic demand. (MTI-Econews)