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Hungary investment volume drops 7.8% yr/yr in Q4, drops 5.5% in 2010

Investment volume in Hungary dropped 7.8% yr/yr in the fourth quarter of 2010 and fell 5.5% in 2010, the Central Statistical Office (KSH) said.

Fourth-quarter investment volume was down 2.3% from the third quarter, seasonally adjusted figures show.

According to earlier KSH figures, investments dropped from the previous quarter in Q1 2009, rose in Q2 and dropped again in the third quarter of last year.

The Q4 yr/yr drop followed a 1.9% yr/yr decline in the third quarter, a 4.9% drop in the second quarter and a 6.4% decline in the first quarter. In a yr/yr comparison investment volume last rose in Q4 2007.

Investment into machinery, equipment and vehicles fell 1.9% yr/yr in Q4 and fell 1.4% in the full year of 2010. Construction-type investment fell by 11.3% yr/yr in Q4 and dropped 8.3% last year.

Except for a 0.3% rise in 2007, investments in Hungary fell in volume terms each year since 2006. Investment volume fell 8.6% in 2009.

In a sectoral breakdown, manufacturing sector investment rose a steep 23.6% yr/yr in Q4, rising now for the third quarter both thanks to a low base and to some large investment projects ongoing in the vehicle, rubber and chemicals branches. Manufacturing investments in 2010 rose 9.4% yr/yr after two years of contraction.

Q4 investment volume in education rose almost 40% thanks to renovations and expansion of existing institutions, and the art, amusement and leisure branch posted a 18.6% rise in Q4, reflecting developments related Pecs as European Capital of Culture and to Hungary's EU presidency. 2010 investment in these branches were up by 55.2% and 22.1%, respectively.

All other branches registered yr/yr contraction in Q4, including steep falls in agriculture (a drop of 33.0%), mining (44.5%) and public administration (23.3%). Agricultural investments fell 25.5% in 2010, investments in mining fell 47.6% and the public administration sector registered a 14.1% fall for the full year.

Construction sector investments fell a steep 16.8% in Q4 after rising 8.4% in Q3, and they were down 6.2% in 2010 after a 21.0% drop in 2009.

The fall of investments in the property branch, which includes home construction, steepened to 22.4% yr/yr in Q4, bringing the full-year fall to 17.1%.

The freight and storage branches, which include motorway construction, registered a 15.1% fall in Q4, and a 12.5% contraction in 2010.

Investment in utilities such as power generation, gas and heating services fell almost 10% yr/yr in Q4 after rises in Q3 and Q1, and investment volume in the sector rose 2.8% to 2010 on 2009.

Investment in the water, sewage and waste management sector was down 3.4% yr/yr in Q4 after rises in the previous two quarters, and they rose 6.4% for the full year.

IT and communication investments fell just 1% yr/yr in Q4 and were down 4.6% for the full year of 2010. Investments in the financial and insurance sector rose 4.4% in 2010 although they fell 4.5% in Q4.