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Domestic Investments Grow Unabated

D&T
August 29, 2019

Investments in the Hungarian economy surged by 18.8% in the second quarter of 2019 from a year earlier, driven by the private sector, according to data from the Central Statistical Office. The figure represents a 4.1% increase versus the first quarter. Dynamic growth rates were recorded in 15 out of 19 sectors. A 31% increase in corporate investments and a 15% increase in machinery procurement played a crucial role in the favorable headline figure. There was a 30% expansion in processing industry investments and an increase of more than 22% in real estate developments and infrastructure projects.
Gergely Suppan, senior analyst at Takarékbank, told state news agency MTI that dynamic investment growth is set to continue going forward as the bulk of investments financed from EU funds will be realized in the coming years. Companies may be encouraged to invest in technology, automation and digitization due to labor shortages and further significant increases in wage costs.
Dávid Németh, a senior analyst at K&H Bank, believes that while investment growth will continue, the momentum will slow, partly due to the completion of ongoing projects and higher base values. EU-funded investments, to be completed within the next 1-2 years, could be replaced by market and government-funded projects, which are more expensive, therefore, the investment drive may be more subdued in the next 1-3 years. If the Eurozone's performance remains permanently weak, it could also lead to negative developments in Hungary, the analyst said.

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