Published on: 28 May 2020

Investments decreased by 1.8% in the 1st quarter of 2020

In the first quarter of 2020 the long lasting expansion of investments broke – partially as a result of the national and global effects of the coronavirus epidemic – in the current quarter the volume of developments was 1.8% lower compared to the same period of the previous year. The decreasing utilisation of EU funds also contributed to the relapse of investments. Despite of the general decrease characterising the national economy, in some areas – among others in healthcare and in information and communication – fixed assets formation grew significantly.

In the 1st quarter of 2020, seasonally adjusted:

The seasonally adjusted volume of investments decreased by 1.1% compared to the previous quarter. Within it the seasonally adjusted volume of construction investments grew by 0.2%, investments in machinery and equipment decreased by 2.2%.

In the 1st quarter of 2020 compared to the same period of the previous year:

The volume of investment activity decreased by 1.8%. Within it construction investments representing approximately 55% of the total volume of investments rose by 2.8%, investments in machinery and equipment representing 43% of the total value of investments decreased by 7%. This represents the most unfavourable change of all three indicators in the past three years.

Investment performance in the case of enterprises employing at least 50 people and realising 58% of investments increased at a rate below the average growth of the previous quarters, by 4.0%, in this trend high volume completed green field investments conducted by foreign owned enterprises played a role. At the same time, in the case of budgetary units, realising 10% of investments, developments were down by 17% compared to the base period, partially as a result of the smaller volume of implemented EU-financed projects in the current quarter.

Despite of the general decrease in investments, developments in the largest weight representing manufacturing -carrying more than three-tenth of investments- slightly increased (1.1%), in spite of the significant decrease in the great weight representing manufacture of transport equipment. Investments significantly increased, due to ongoing large-scale projects, in the manufacture of electrical equipment, in the equally important manufacture of rubber and plastic products and in the manufacture of chemicals and chemical products.

Real estate investment volume, representing close to one-fifth of total investments, grew outstandingly, by 10%, within it dwelling constructions increased even more significantly, investments in business facilities for rent (e.g. office buildings) grew more moderately.

Developments grew significantly in several smaller weight representing sections. The highest growth characterised investments in agriculture, forestry and fishing (31%) partially as a result of fodder mixer machines and breeding stock acquisitions. The second largest growth was registered in the field of information and communication (28%), in which telecommunication mast and cable network constructions played a role too. In conjunction with the pandemic, due to the outstanding developments in in-patient care, in the field of human health and social work activities investments grew by 25%.

Investments grew moderately (by 1.5%) in wholesale and retail trade, and repair of motor vehicles and motorcycles representing the fifth highest weight, compared to the high base of the previous year.

Investment activity decreased in the majority of the sections. The volume of the third largest investor, transportation and storage in the current quarter – after three years of continuous growth – dropped (by 5.7%). The main reason behind it was the reduction in infrastructural investments, but among others enterprises operating in railway transport held back their investments as well.

Certain fields of the general government played an important role in the decrease the of investment performance characterizing the whole national economy. The volume plummeted by 30% in the case of the sixth largest investor, public administration and defence; compulsory social security, mainly as a result of the more moderate acquisitions conducted by central governmental bodies. In the seventh largest field, that of arts, entertainment and recreation – due to the lower expenditure of the ongoing sport and culture related projects – investments decreased by 23%. In the cases of education (-8.5%) and water supply and waste management (-2.4%) investments decreased at a higher rate than the national economy’s average, too.

Investments decreased even by a higher rate in several relatively small weight representing sections. The greatest decrease was recorded in the field of the little weight representing mining and quarrying (-54%), in correlation with the fall in the international price of energy carriers. Investments significantly decreased in the energy industry (-37%), partially as a result of the reduced expenditures of solar-panel projects in the current quarter. Developments of financial and insurance activities also decreased (-32%), in part as a result of the smaller acquisition volume of IT equipment.

Investment outlay of national economy

Section 1st quarter of 2020 Quarters 1–4 of 2020
at current prices, million HUF volume index, corresponding period of previous year=100.0% at current prices,million HUF volume index, corresponding period of previous year=100.0%
Total1 796 434 98.2 10 555 710 113.9
Of which*:
manufacturing557 699101.12 831 310116.1
real estate activities 331 290110.41 841 465116.9
transportation and storage 226 65694.31 720 074115.1
agriculture, forestry and fishing113 281130.8419 819108.5
wholesale and retail trade, repair of motor vehicles and motorcycles102 925101.5498 697101.9
public administration and defence; compulsory social security65 99270.3670 314104.6

*Data of the six largest weight carrying sections, based on investment performance of the 1st quarter 2020.