In H1 2018, the volume of investment was up by 13.4 percent year-on-year, rising to a total of HUF 3113bn. Investment was higher in almost every economic sector, and this has also contributed to robust GDP growth. In Q2 2018, the indicator showed growth of 15.3 percent year-on-year (totalling HUF 1 852bn).

The fact that the rate of quarter-on-quarter growth was 4.2 percent shows strong growth momentum. Favourable data have been the result of the implementation of EU-funded projects, the housing boom resulting from the Government’s Housing Programme and a corporate income tax rate of 9 percent which was reduced in 2017 thanks to the six-year wage and tax agreement. The EU’s lowest CIT rate is expected to make Hungary even more attractive for investment also in the future.

The fact that the volume of output in the construction sector gained 15 percent year-on-year, fuelled by the dynamically increasing volume of infrastructure and housing projects, was also a driver of investment growth in the second quarter. Investment in machinery and equipment was also up by 16 percent year-on-year, thanks mainly to capacity expansion projects. In the commercial accommodation and catering sector the volume of investment grew by 21 percent as a consequence of hotel construction and reconstruction works, while that of the construction sector increased by 29 percent. One of the drivers of the 67 percent growth in the energy sector was the building of solar energy facilities.

The robust, 13 percent rate of investment growth registered in the first half of the year is in line with the projected 12.8 percent of the Convergence Programme.

Dynamic investment growth confirms upbeat expectations not only for this year but also for the medium-term as the completion of capacity expansion projects is going to boost production and thus add impetus to economic growth. Both private and public sector projects are expected to continue to contribute to the sound growth trend.

(Ministry of Finance)