In 2017, the volume of investment has reached HUF 6440bn, the highest figure since 1995, the year when the Hungarian Central Statistical Office first compiled relevant data. This volume shows an increase of 16.7 percent compared to last year.

Investment growth has been driven by housing projects facilitated by the Government’s Housing Programme and the 9 percent corporate income tax rate resulting from the six-year wage and tax reduction agreement of 2016.  Since 2010, the volume of gross fixed capital formation has gained more than 30 percent in the country, the highest figure in the region.

Last year’s growth was also fuelled by investment volume of HUF 2295bn recorded in Q4 2017, the two-thirds of which originated from corporate investment. It is an especially promising sign that dynamic growth has been observed in 18 out of the altogether 19 economic sectors. Of these, investment activity within the manufacturing sector, the division with the largest weight, increased by 7.3 percent last year.

As far as large enterprises are concerned, several recently announced large-volume projects, especially in the car industry and at related suppliers, are scheduled to be implemented in the near future. In the case of SMEs, besides low interest rates and favourable business conditions the accelerated disbursement of EU funds is also expected to underpin investment growth in the future.

Hungary’s corporate income tax rate of 9 percent is the lowest within the EU, and this expedites enterprises which are to settle in Hungary to make positive investment decisions but it also facilitates capacity expansion projects of companies already operating in the country.

Dynamic investment growth will improve Hungary’s positive economic outlook in the medium term, as investment projects will have been completed and production will begin.

(Ministry for National Economy)