Investment volume up by 8.7 percent in Q1

In the base period, investment volume contracted by 3.4 percent.

Corporate investment climbed by 10.5 percent, driven by developments at foreign-owned companies, while public sector investment fell by 13.0 percent as central administrative organisations “strongly reduced” material procurements, KSH said.

Construction investments rose by 2.7 percent and investments in machinery and equipment climbed by 6.0 percent, KSH said.

In absolute terms, investments were at 2,446 billion forints (EUR 6.2bn). Businesses with at least 50 people on payroll accounted for 54.2 percent of the total and public sector investments made up 10.5 percent.

Construction investments rose by 10.1 percent and investments in machinery and equipment increased by 7.0 percent.

Construction investments accounted for about 58 percent of the total.

Manufacturing sector investments climbed 19.7 percent, real estate sector investments were up by 10.7 percent, logistics sector investments increased by 2.1 percent, and construction sector investments rose by 11.7 percent.

Quarter on quarter, investment volume rose by a seasonally-adjusted 3.2 percent.

Senior analyst of Magyar Bankholding Gergely Suppan said that investment volume rose to an all-time high in the first quarter. He noted that since the investment growth rate slightly exceeded that of GDP growth, the unexpectedly strong GDP growth in the first quarter may have been partly due to the outstanding growth in investment.

The increase reflects the generous direct support the government gave businesses making investments to offset the negative impact of the pandemic as well as the low-interest loans provided by the central bank and state-owned banks. Manufacturing industry investments were also supported by the high level of FDI inflow, he added.

Rising interest rates, increasing risks due to geopolitical tensions and runaway energy prices and investment costs can create uncertainty but energy-efficiency investments can be recouped even amid higher interest rates, the analyst said.