Investments Down in Hungary by 2.8% in Q1 2023

In the 1st quarter of 2023, the volume of investments decreased by 2.8% compared to the same period of the previous year, and increased by 1.0% compared to the previous quarter (seasonally adjusted), the Hungarian Central Statistical Office reported.

As noted by MTI, the investment volume has been shaped by a decrease in business activity. The decline in the performance of the current period was moderated mostly by the developments performed in the significant weight representing manufacturing industry, real estate activities as well as in agriculture.

The volume of investment activity lessened by 2.8%. Within it, construction investments representing almost six-tenth of the total volume of investments decreased by 8.5%, while investments in machinery and equipment representing more than four-tenth of the total value of investment grew by 5.3%. The latter is primarily due to the almost 10% increase in the volume of imported machinery and vehicles.

The volume of investment in the case of enterprises employing at least 50 people and realizing 51% of the investment performance decreased by 7.9%, at the same time in the case of budgetary units, realizing 11% of investments, developments exceeded the level of the base period1 by 2.3%. The volume of other investments (enterprises with fewer than 50 employees, individual enterprises, non-profit ones as well as households) increased by 3.4%.

Despite the general decrease in investments, the performance value increased in seven sectors of the national economy. Developments of manufacturing, the largest investor, accounting for more than three-tenth of developments of the national economy, in the current quarter increased more moderately than the double-digit expansion in the previous quarters, (by +7.3%). In the first quarter of 2023, the revival of vehicle production, which represents the second largest weight, played the central role in the growth, at the same time the volume of investments in the manufacture of electrical equipment, with the largest share, fell slightly behind the last year’s value, mainly due to the gradual winding down of large-scale projects going on for a longer time. Investment performance increased also in the subsections of electronics industry, the pharmaceutical industry, and as well as in the other manufacturing.

The investment performance of real estate activities, the second largest investor, accounting for 23% of developments in the national economy grew by 1.8%. The volume change was determined by two opposing processes: the closure of the vigorous cultural and office building construction projects characterizing the base period has been offset by a large increase in real estate renovations (mainly energy efficiency upgrades) in the current period.

The decrease of investment volumes in transportation and storage, characterizing the period from the second quarter of 2022, continued (–2.3%), the unfavorable performance was mainly due to the lessening in state infrastructural developments.

The reason of the 4.7% volume decrease in wholesale and retail trade was – among others – the decrease in the investment activity of the enterprises active in wholesale trade in the current period, as these stimulated the growth in the same period of the previous year.

After single-digit declines in the previous two quarters, the investment performance in agriculture increased by 7.0%, the fact that farmers increased their development expenditures both in import and domestic machinery and vehicles played a role, too.

Public administration developments fell by approximately 34%, due to central as well local government’s restrained investments.