Investment volume in Hungary fell by an annual 9.6%, the sharpest decline in years, in the first quarter of 2016, the Central Statistical Office (KSH) said. The unfavourable data come after investment volume in Hungary grew by 7% in the fourth quarter of 2015. KSH reported previously that Hungarian gross domestic product also fell sharply in the first quarter of 2016, growing only by an annual 0.9% in the first three months of the year.
According to the Economy Ministry, the investment contraction is temporarly as it was mainly due to the winding up of developments financed from European Union resources, which affected investments by central budget organisations to a larger extent. In areas less affected by this such as machinery investments, and in certain sectors such as manufacturing, the decline was more moderate. Manufacturing sector investment volume was down by 3.6% from a year earlier. In 2015, investment volume growth was 0.6%. In absolute terms, investments came to 5.582 trillion forints.
Analysts interviewed by news agency MTI said the investment contraction did not come as a surprise but said the extent of the decline exceeded expectations. Chief analyst of K and H Bank Dávid Németh noted that these were the weakest investment data of the past four years. He said it was unfavourable that investment volume fell almost 5% in the business sector. The question is whether this is a one-off decline in business-sector investments or if it will turn into a long-term trend, he added.
Gergely Suppan of Takarékbank said investments could grow again in the near future with the establishment of new automotive capacities, which is supported by several business surveys. Housing investments could contribute substantially to investment growth next year, he added. Suppan predicted ever slower decline in the remaining part of the year and investment growth of up to 5% or slightly more next year.
via ksh.hu and hungarymatters.hu