In Q1 2017, the Hungarian economy grew by 4.2 percent, the second highest growth rate in the past ten years and better than prior estimates.

This figure also confirms that the Hungarian economy has been placed on a stable and balanced track. Pro-competitiveness measures, tax reductions and the recent wage agreement are expected to boost growth in both the short and long terms. In order to safeguard future economic growth, Hungary’s sovereignty in terms of economic-, taxation and employment policies must be maintained.

The largest single factor contributing to the 4.2 percent growth was the market services sector, with 2.3 percentage points. The industrial and construction sector added 1.6 percentage points and 0.4 percentage points, respectively, to the expansion. Data compiled by the Hungarian Central Statistical Office (KSH) show that the agricultural sector posted negative growth of 0.2 percentage points, but the sector’s performance may improve in the sector half of the year.

On the investment side, robust growth was observed. Thanks to the Family Housing Subsidy Programme, the value of home construction projects increased by some 50 percent. Enterprises have also implemented large-scale capacity expansion projects, partly as a result of the reduction of corporate income tax rate to 9 percent as of 2017.

The GDP grew by 1.3 percent quarter-on-quarter, the highest rate since 2005. In that year, however, the price of expansion was higher debt and fiscal deficits. This year, growth was achieved while economic balance indicators remained favourable.

The rate of Hungary’s economic growth was double the EU average, and in case this gap in growth rate persists in coming quarters, Hungary’s convergence to highly developed member states will accelerate.

First quarter data have confirmed the full-year growth estimate of 4.1 percent, as predicted in the Convergence Programme.

(Ministry for National Economy)