The Hungarian economy grew even faster in 2014 than prior data had indicated, as it gained 3.6 percent in the observed period. Thus, Hungarian GDP reached the pre-crisis level.

Data published today also confirm that Hungary has been on the right track, as the structure of economic growth has become more stable, balanced and sustainable also in the long term. The fact that almost every sector has repeatedly posted dynamic growth clearly proves that.

In the last quarter of 2014, the Hungarian economy expanded by 3.4 percent year-on-year. Productive sectors continued to be the main drivers of growth: primary thanks to increased production capacity at the car industry, the volume of industrial output was up by 4 percent, while the construction sector expanded by 6.2 percent as a result partly of infrastructure development projects. The performance of the agricultural sector still supports growth, as in spite of the high basis in Q4 2014 this sector added 12 percent more to GDP in comparison to the corresponding period of the previous year.

Within the services sector, the tourism and retail branches showed outstanding performance, in line with rebounding domestic demand. Greater transparency created by on-line cash machines has also been instrumental for the favourable data of the retail sector.

Thanks to low inflation mainly driven by public utility price cuts, growing employment and higher wages in real terms, household consumption was also higher (by 1.9 percent). Investments also grew by 1.9 percent. As a whole, the investment rate exceeded 21 percent last year.

Despite sluggish external demand, the volume of exports remained massive in the last quarter of the previous year (up by 9.4 percent), which signals that the Hungarian economy is becoming less and less dependent on the economic cycles of the European Union. Last year, exports constituted 91 percent of GDP, an outstanding figure even from an international perspective.

In 2013, the Hungarian economy has shifted toward a sounder and more balanced growth structure. In the last quarters, this positive trend became persistent. It has to be noted that economic growth, which well exceeds 3 percent, could be achieved in parallel with a favourable internal and external balance path. In contrast to the economic policy of leftist governments that had pushed the country deeper and deeper into debt, general government budget deficit has recently been well below 3 percent, the current account has posted massive surpluses and the debt-to-GDP ratio is set to decline compared to 2013.

In light of last year’s data it can be concluded that economic outlook for 2015 has improved substantially. This also means that economic growth is expected to be above the 2.5 percent estimate predicted during the drafting of this year’s budget.

Growth data – which are excellent even from an international perspective – as well as declining deficit and general government debt levels clearly show that credit rating agencies shall upgrade Hungary’s rating this year.

(Ministry for National Economy)