Hungary Continues to See Investment Growth Despite Government Investments Decreasing (Hungary)
The latest figures from the Central Statistics Office (KSH) regarding investments have been released. They show that the government decreased its investments, but the country saw overall investment growth. This was due to foreign companies investing in the country.
Some Key Figures
For reference, investment growth in Hungary began in Q2 of 2021. The figures for Q1 of 2022 show a continuation of that. Compared to the same period in 2021, investment volume increased 8.7 percent.
Construction Investments
Construction investments made up 58 percent of the total investment volume. This category alone grew by 10 percent. Meanwhile, investments in equipment and machinery represented 41 percent of the total investment, seeing an increase of 7 percent. Of those investments in equipment and machinery, about 70 percent were from imports.
Accounting for seasonal adjustments, there was a quarter-to-quarter increase of 3.2 percent. This included a (seasonally adjusted) increase in construction investments by volume of 2.7 percent. It also included an increase in investments in equipment and machinery (seasonally adjusted) of 6.0 percent.
Manufacturing Investments
Developments in manufacturing comprised the largest investor category. This accounted for 29 percent of the national economy’s developments and increased by nearly 29 percent.
Real Estate Investments
Real estate was the second-largest investor category. It accounted for 22 percent of the national economy’s developments. This sector grew by 11 percent, largely because of the growth of residential construction.
Agricultural Investments
Agricultural investments saw an increase in volume of 20 percent. This was largely due to the expansion of developing agricultural buildings.
Some Areas Saw a Decrease
Not all areas of investments saw growth. For example, transportation and storage saw volume growth decrease by 2.1 percent. Experts say this was due to fewer state infrastructure developments.
There was also a 2.8 percent volume decrease within the category of trade. Experts say this was because while retailers had outstanding developments in 2021; these developments have been completed.
Another area with a decrease was public administration. The category saw a drop of 5.2 percent This was likely due to changes in development levels among central administration bodies.
What the Analysis Says
Gergely Suppán, the senior analyst of Magyar Bankholding, provided insight. He reported that the investment volume reached an all-time high during the first quarter.
According to Suppán, the investment growth was slightly higher than the GDP growth rate. As such, he believes the unexpectedly strong GDP growth being may have been partly because of the investment growth.
Conclusion
The Hungarian government reduced its investments recently, but the first quarter of 2022 still saw investment growth for the country. This was largely fueled by foreign investors, and manufacturing and real estate led the growth.
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