Focus-Hungary Slower Q3 Investment May Hit GDP
The Central Statistical Office said investments increased by 4.2 percent in the third quarter and 5.6 percent in the January-September period, compared with a 6.8 percent rise in the second quarter and 11.4 percent for all of 1998.
"I had said GDP would grow by 4.0 or 4.1 percent in the third quarter, but now I say 3.9 percent would be more realistic," said Adam Hegyi, analyts at IE-New York Broker.
He had expected a seven percent increase in investment volume in the third quarter.
The smaller rise would cut the GDP growth rate by 0.2 or 0.3 percentage points for the quarter, but strong export performance in the period may offset part of that impact, Hegyi said.
Analysts said the slowdown in the rise of investments output in the third quarter was unlikely to be the beginning of a trend, however, as economic growth is seen picking up in the next few quarters.
They added that investment output is usually lower in the first and third quarters, while an extraordinarily high increase of 18.1 percent in the third quarter of 1998, the base for the fresh data, may have pushed down this year's figure.
Csaba Varga, analyst at Citibank Securities, said a 5.6 percent rise in investments in the manufacturing industry was a disappointment, adding that the slow growth could lead to a temporary lack of capacity in certain economic fields early next year. However, he said he expected a general rise in investments next year.
Hegyi said a relatively low level of investments in the third quarter was unlikely to scale down economic growth in the longer term as many producers still had unused capacities.
"If capacities are not growing, it will not necessarily cut production in the next year," he said.
"If manufacturing investments remain so low in the longer term, that could cut direct investment inflow (into Hungary)," he said. He added, however, that a recent strong capital inflow indicated that the trend was the opposite.
"I had said GDP would grow by 4.0 or 4.1 percent in the third quarter, but now I say 3.9 percent would be more realistic," said Adam Hegyi, analyts at IE-New York Broker.
He had expected a seven percent increase in investment volume in the third quarter.
The smaller rise would cut the GDP growth rate by 0.2 or 0.3 percentage points for the quarter, but strong export performance in the period may offset part of that impact, Hegyi said.
Analysts said the slowdown in the rise of investments output in the third quarter was unlikely to be the beginning of a trend, however, as economic growth is seen picking up in the next few quarters.
They added that investment output is usually lower in the first and third quarters, while an extraordinarily high increase of 18.1 percent in the third quarter of 1998, the base for the fresh data, may have pushed down this year's figure.
Csaba Varga, analyst at Citibank Securities, said a 5.6 percent rise in investments in the manufacturing industry was a disappointment, adding that the slow growth could lead to a temporary lack of capacity in certain economic fields early next year. However, he said he expected a general rise in investments next year.
Hegyi said a relatively low level of investments in the third quarter was unlikely to scale down economic growth in the longer term as many producers still had unused capacities.
"If capacities are not growing, it will not necessarily cut production in the next year," he said.
"If manufacturing investments remain so low in the longer term, that could cut direct investment inflow (into Hungary)," he said. He added, however, that a recent strong capital inflow indicated that the trend was the opposite.
