The Central Statistical Office (KSH) said investment volume in Hungary rose by an annual 8.7 percent in the first quarter of 2022, supported by investments from businesses and growing activity by households. 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 organizations “strongly reduced” material procurements.
Senior analyst of Magyar Bank holding Gergely Suppan said 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.
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