According to data published by the Hungarian Central Statistical Office (KSH), in January 2017 the volume of construction sector output rose by 18.5 percent compared to the corresponding period of the previous year. In comparison to December 2016, the indices adjusted for seasonal and calendar effects show an increase of 4.6 percent. Data from the month of January, also considering developments started at the end of last year, signal a trend reversal following the downturn of 2016.
According to the latest report of the Hungarian Central Statistical Office (KSH), in the period December 2016-February 2017 Hungary’s downward unemployment and upward employment trends have remained in place. In the observed period, the employment rate has hit the highest and the unemployment rate has hit the lowest respective figure in two decades.
According to data published by the Hungarian Central Statistical Office (KSH) at the end of February, the housing market boom which began in 2015 is set to continue in 2017. The number of dwellings completed in 2016 was up by 31 percent compared to 2015, and the combined number of building permits and declarations was more than two-and-a-half times higher than that of 2015. The dynamic growth in dwelling constructions may add as much as 0.4-0.5 percent to Hungary’s GDP, but dwelling construction costs are also predicted to rise further.
The conclusions concerning Hungary’s economic policy steps made by the Organization for Economic Co-operation and Development (OECD) in their annual study “Going for Growth”, published on 17 March, were generally upbeat, while the institute also formulated a number of proposals for the future.
The upward trend in the external trade, in place since Q2 2013, has continued in 2016: the volume of both exports and imports rose. The surplus was up by EUR 1.3bn compared to the previous year, totalling EUR 9.9bn, a historic high in Hungary.
Two out of the three major international credit rating agencies, Moody’s and Standard&Poor’s had reviewed the rating of Hungarian long-term forex government securities this year and left it unchanged for at “BBB-“, with stable outlook. The announcement of Standard&Poor’s came on 24 February 2017, while that of Moody’s was on 6 March. Prudent fiscal policy, improving economic performance and Hungary’s stable economic balances have all contributed to the fact that Hungary has managed to maintain the rating. On the other hand, the country must improve the external debt position.
The Commission’s report is upbeat about the state of the Hungarian economy: it has been placed on a stable growth path, private consumption and exports have increased. Labour market indicators have improved, and significant measures have been implemented to incentivize the changeover of public work employees to the primary labour market. The fiscal deficit and the general government debt-to-GDP ratio have both declined; while the country’s net external position has also improved. The Commission prognosticates that these favourable trends are set to continue in coming years.
The performance of the Hungarian agricultural sector was outstanding in terms of output, employment and exports in the year 2016: the sector’s output was up by 18 percent compared to the previous year, and 16 500 new jobs have been created. Thus, this branch of the economy has become the growth engine of the entire Hungarian national economy. As special guest of the traditional Berlin International Green Week (Grüne Woche), one of the largest annual European agricultural exhibitions, Hungary has staged an impressive performance after the record-breaking year of 2016.
In the European Economic Forecast – Winter 2017, published on 13 February 2017, the European Commission has revised its prior estimate of Hungary’s GDP growth for the year 2017 from 2.6 percent to 3.5 percent. This prognosis is already nearer to the figure published in December 2016 by the Ministry for National Economy, predicting growth rates of 4.1 percent for 2017 and 4.3 percent for 2018.
All three major credit rating agencies have by now restored Hungary’s investment grade status. This had mainly been the result of falling external debt levels and lower exposure to forex risks as well as a drop in the stock of short-term external debt. The stock of forex reserves has also substantially exceeded the level of short-term forex debt. As a consequence, Hungary’s vulnerability to external risks continued to diminish in the third quarter of 2016.