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Thursday, November 29, 2007

Hungary Investment in Q3 2007

Well, one of the mysteries about Q3 GDP is now out of the way, since KSH reported today that Hungary's investment volume dropped by 2.5% year on year in the third quarter of 2007. The indicator was positive only once in the past 18 months, which indicates that a marked rebound is still far away.

Of the individual sections of the national economy government areas continue to perform badly. The Central Statistics Office (KSH) detected a decline in healthcare investments (0.5% in Q3, 7.5% in Q1-Q3), public administration (8% in Q3, 32.8% in Q1-Q3) and education (31.9% in Q3, 15.6% in Q1-Q3). Diminished state orders are suspected of being behind smaller investments in transport and the construction industry, as well. Of course, while those specifically worried about the size of the fiscal deficit might see nothing especially preoccupying about a decline in investment in the health sector, we do need to bear in mind that Hungary is now ageing rapidly, and a good and modern public hospital infrastructure is going to be very necessary on a larger scale than now just a few short years ahead of us.

This is also worthy of note:

The investments of manufacturing (giving the greatest weight) rose by 19.6%, first of all owing to the growth in manufacture of rubber products, that of transport equipment, as well as that of radio, television and communication equipment and apparatus. The investments of hotels and restaurants increased by 18.1,, primarily due to the reconstruction, extension of hotels. In the section of real estate, renting and business activities an increase of 0.7% was observed as well. This section covers the dwelling construction, too.

Presumeably the significance of the investment component in rubber products is associated with the construction and installation of the 500 million euro factory being built for South Korea's largest tyre maker Hankook Tire in Dunaujvaros, 68 kilometres south of Budapest.

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