Analysts polled by MTI on Friday said Hungary’s GDP growth is likely to be under 3pc in 2008 in light of figures published in the morning that show falling Q2 investment volume.
Year-on-year investment volume in Hungary dropped 2.1pc in the second quarter of 2008, falling at slower pace after a 4.8pc drop in Q1, preliminary figures published by the Central Statistics Office (KSH) show.
Magyar Takarekszovetkezeti Bank’s Gergely Suppan said full-year investments were unlikely to rise more than 1pc in 2008, even as other countries in the region record double-digit investment growth, sometimes as high as 20pc.
Falling investments and a drop in employment numbers point to sluggish growth under 3pc in 2008, he said. He noted government proposals to cut taxes to spur growth will have little effect on Hungary’s economic expansion in the longer run as they would reduce Hungary’s high level of tax centralisation only slightly.
K+H Bank’s Gyorgy Barcza said the Q2 fall in investment volume shows the effect of the slowdown in Europe, though he conceded the base is high because of a huge tyre plant built by Korea’s Hankook Tire during the period. He put GDP growth in 2008 at just 2.5pc, but he said the arrival of EU funding could bring public sector investments out of a slump and add a full percentage point to GDP growth in 2009.