The volume of investments in Hungary decreased by 2.3% year-on-year (yr/yr) in Q3 of 2008, totaling HUF 1,120.8 billion, the Central Statistical Office (KSH) said. Analysts see further decline in investments.
The agency said the slump was caused by growth in machinery and equipment investments not being enough to offset the deterioration in the construction industry. Construction-type investments dropped 6.5% yr/yr to HUF 633.3 billion, while machinery and equipment investments rose 5.3% yr/yr to HUF 475.2 billion. In the first nine months of the year, a total of HUF 2,956 billion was spent on investments, down 2.9% from the corresponding period of 2007. The only sectors that saw growth in Q3 were real estate, renting and business activities sector, up 3.6% y/y to HUF 295 billion, KSH said.
Analysts polled by MTI expect the volume of investments to continue to decline in Hungary due to the global financial and economic crisis. Zoltán Török of Raiffeisen Bank said that the KSH figures showing a decline in investment were not a surprise. Török noted that the decrease in the number of investments in the manufacturing industry is particularly unfavorable. Török expects the volume of investments to fall 4-5% in 2009, mainly in the building and manufacturing industries. Török said it is questionable whether EU funding will be sufficient to compensate for the decrease.
Balázs Csonto of ING Bank remarked that the decline in the number of investments contributed to the lower-than-expected GDP growth in Q3 2008. Csonto commented that although the investments in the manufacturing industry decreased 1.6% in Q3 2008, it must be noted that manufacturing-industry investment dropped 9.8% in Q1 and 2.4% in Q2. Csonto remarked that the increase in home building in Q3, is also likely to decrease in the future. (Népszava, Napi Gazdaság, MTI–Econews)