Less EU funds, less investments in Hungary

The volume of investments in the Hungarian economy was 20.3% lower in the second quarter of 2016 than in the same period of 2015, the Central Statistical Office (KSH) reported on Wednesday. Compared to the previous quarter investments were down 0.8%, which means the contraction did not stop, portfolio.hu reports

The financial website points out that developments in the public sector were hit drastically by the ebbing of EU funds.

Investments shrank not only in the public but also in the business sector. The 53.5% contraction in the public sector is evidence to what EU fund absorption data already suggested, namely that the crumbling sector might get some relief from EU funds only in the second half of the year.

The question portfolio.hu asks is whether this is rock bottom for the sector or the worst investment figure is yet to be reported in Q3. There may be even more dramatic year-on-year figures ahead, though, as the cabinet really stepped on it in the last quarter of 2015 to draw 100% of available EU funds, thus creating an extremely high base. A stimulus package promised for the second half may save the day here, provided the planned measures start to bear fruit in a hurry.