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Hungary's economic growth accelerates in Jan-Apr

Hungary's GDP growth accelerated to 4.6% in the first quarter of the year from 4.3% in Q4 2005 and 3.2% in the same period last year. The growth was driven by fixed capital formation and a pick up in exports, Central Statistics Office (KSH) said in its latest monthly summary on Wednesday.

Household consumption, which accounts for a significant component of GDP, rose 2.2% year-on-year, far above 1.4% in Q4 2005, but still much lower than the headline figure.
On the production side, value-added output in the manufacturing sector rose an outstanding 11.5% from a low base, and well over the full-year rise of 6.4% last year. Industrial output slowed down to 1.8% year-on-year in April due to the effect of a higher base and fewer working days due to the Easter holidays, which fell in March last year. Four-month industrial output was still 9.9% up from the same period last year with domestic sales volume accelarating to 5.7% and robust exports increasing 14.5% from January-April last year.
The 9.7% rise in fixed capital formation, compared to 6.8% in Q1 2005, was mostly fuelled by investments financed from the central budget. Investments in the transport storage and communication sector, which include road building, went up 52%, KSH said. Investments in the manufacturing and farm sector, however, fell by 9% and 20% respectively. Machinery investments were up 3.7% year-on-year as against 16.4% rise in construction investments.
Four-month exports rose 15.5% year-on-year in euro terms and imports grew by 14.1%, resulting in a trade deficit of €842 million, down €90 million from the same period last year despite deteriorating terms of trade. Import prices in forint terms rose by 7.2% from the effects of a weakening forint and increasing international energy prices. Export prices grew just 4.2%.
In the three-month period of March-May, the average number of employees rose 42,000 from the same period last year to 3.928 million, while the number of unemployed were up just 7,000. The unemployment rate was 7.3%, 0.1 percentage point higher than a year earlier.
The inflation rate in May of 2.8% was the highest so far this year, pushed up by seasonal food prices and increasing car fuel prices, KSH said in its summary.