In Q1 2014, the volume of investment increased by 22.6 percent year-on-year. Whereas the 15 percent growth in the previous quarter was a ten-year record high, current data show an unprecedented increase. As all major economic sectors have contributed to the steady improvement which has been observed in the past four quarters, it can be concluded that Hungarian economic growth has been placed on a sound footing.

Recently published data are confirming that investment growth added significantly to first-quarter GDP growth, while investment projects that are being implemented or completed will underpin economic expansion in the coming quarters. The fact that the composition of investment was balanced is an especially promising development, as investment related to machinery and construction was up by 25.2 percent and 20.2 percent, respectively. Investment in the manufacturing sector, the economic division of the largest weight, accelerated and gained 27.6 percent. The main drivers of this growth have been vehicle manufacturing supplier divisions which clearly indicates that car industry manufacturers settled in Hungary are generating further strong growth through their supplier chains.

In addition to the impressive performance of the manufacturing sector -- thanks to large-scale infrastructure development projects -- investment related to transportation and storage showed outstanding growth of 65 percent. In the first quarter, investment volume growth within the energy, agricultural, healthcare and construction sectors was 22 percent, 19 percent, 34 percent and 14 percent, respectively.

The rising number of manufacturing sector orders, the efficient utilization of EU funding, the projects related to the Funding for Growth Scheme and improving business sentiment are all assisting investment growth that has been increasingly prevalent in a growing number of economic sectors. Production capacities created by new investment projects will mainly boost output at productive sectors which in turn is expected to facilitate export growth, lift employment, increase wages and contribute to household consumption growth.

(Ministry for National Economy)