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Investment in Hungary may grow around 25 percent y/y in this year and so the investment rate may go back slightly above 20 percent in 2017 from below 18 percent in 2016. It also confirms the view that besides, consumption, the grossed fixed capital formation was the main driver of economic growth in Q1 2017 and may remain one of the biggest contributors in the whole year. But it is important also to highlight that Hungary had the lowest investment among CE countries in 2016.
Investment in Hungary jumped by 34.1 percent y/y in Q1 2017. Although the figure looks great it is less favourable than at first sight. The base was quite low as the investment were falling massively last year (more than 20 percent) so the fix based (2010=100) seasonally adjusted investment level was even below the 2015 investment level.
The acceleration was driven partly by the new EU projects and government spending (there was more than 2 percent of GDP extra expenditure in last December virtually, which might be spent in Q1 this year in reality), boosting the infrastructure and administrative investments.
"The good news is that we can recognise a quite stable investment growth in the manufacture industry and trade, while the property investments (both in household and business segment) is also accelerating," KBC Research commented in its latest report.
