Aug. 29 (Bloomberg) -- Polish and Hungarian economic growth probably accelerated in the second quarter as exports of cars and computer equipment to western Europe rose, surveys of economists showed.

Poland's economy grew an annual 2.8 percent after 2.1 percent growth in the first quarter, according to the median estimate of 15 economists in an Aug. 30 Bloomberg survey. Hungary's expansion picked up to an annual 3.8 percent from 2.9 percent, the median of nine forecasts gathered by Bloomberg on Aug. 23 showed.

Entry into the European Union last year boosted the two nations' exports from companies including the Polish unit of Fiat SpA, Italy's biggest carmaker, Raba Rt., a Hungarian vehicle parts maker and the Hungarian unit of Amsterdam-based Royal Philips Electronics NV. EU membership pulled down trade barriers, letting producers ship freely within the world's largest trading region.

``The improving trade balance is helping growth, which is driven by exports and investment,'' said Barbara Nestor, an economist at Commerzbank in London. ``The dynamic expansion of investments may mean a strong rate of growth this year.''

Poland's Central Statistical Office will report second-quarter GDP growth today at 4 p.m. in Warsaw. Hungary's report will be published the following day at 8 a.m. in Budapest.

In June, Polish exports grew to a record 6.6 billion euros, ($8.1 billion), 13.4 percent more than in June 2004, the National Bank of Poland said on Aug. 12. Cumulative 12-month exports totaled 70.8 billion euros, 18 percent higher than a year ago.

Hungarian Trade

Hungary's trade deficit in the first six months narrowed to 1.18 billion euros from 2.32 billion euros in the same period last year, the statistics office reported Aug. 9. Exports in June totaled 4.31 billion euros, compared with 4 billion euros in May and were up 8.7 percent from June 2004.

That has been a boon for manufacturers in the new EU states, many of whom are units of foreign companies that moved to the east to take advantage of lower operating costs and wages.

Poland's average monthly wage, at $760 in July, is a fraction of the more-than $4,500 a month average salary in Germany. Hungary's average wage was $779 in the same month.

Of the more than 300,000 passenger cars produced in Poland through July, 93 percent were sold abroad, up from about two-thirds last year, with export sales led by the largest Polish carmaker, Fiat Polska Sp. z o.o., said Samar, the company that monitors the Polish car market, on Aug. 22.

Increased Sales

Solaris Bus & Coach SA, the largest Polish bus and trolley-bus maker, sells 80 percent of its vehicles to the EU and, after producing 400 buses last year, is planning to make 2,000 this year because of a ``growing number of orders,'' said company President Krzysztof Olszewski in an Aug. 25 interview.

Hungary's Raba said on Aug. 12 second-quarter sales surged 41 percent to 22.9 billion forint ($114.7 million) from the same period a year earlier. Exports make up about two-thirds of revenue. Sales in the U.S. surged 61 percent and revenue from central and eastern European markets climbed 29 percent.

Overseas sales also rose at the Hungarian plant of Philips and the Polish computer-monitor unit of Korea's LG Electronics.

Industrial output grew 8.5 percent in the second quarter from a year earlier, compared with 2.6 percent in the first, according to the statistical office Aug. 12. Hungarian companies in July became more optimistic about their business prospects, a GKI survey published Aug. 22 showed.

Consumer Demand

At the same time, companies are holding down operating costs to compete against western rivals and governments are more reluctant to boost state salaries as they work to cut budget spending and adopt the euro. Euro candidates need to keep their deficits to within 3 percent of GDP to make the switchover.

That has capped consumer spending and inflation, holding back import growth. The Polish inflation rate dropped in July to 1.3 percent from 1.4 percent, government reported Aug. 16. Hungary's inflation rate fell to 3.7 percent in the same month from 3.8 percent.

As a result, the two nations, which have the highest borrowing costs in the EU, may continue to cut interest rates this year, said economists including David Nemeth at ING Bank in Budapest.

Hungary's central bank lowered the benchmark rate for an 11th consecutive time on Aug. 22 to a post-communist low of 6.25 percent. Poland's Monetary Policy Council reduced the benchmark seven-day intervention rate to a record 4.75 percent on July 28.

``Interest rate reductions have certainly supported GDP growth,'' said Nemeth in a phone interview on Aug. 19.

There are signs that consumer demand will pick up, contributing to economic growth later in the year.

Polish wages rose an average 4.9 percent in the second quarter, compared with a 2.2 percent gain a year ago. Investment outlays for companies employing more than 50 people increased 4.5 percent in the first half and new investment outlays surged almost 35 percent, compared with a 1.8 percent increase last year, the statistics office reported on Aug. 23.

To contact the reporter on this story: Dorota Bartyzel in Warsaw dbartyzel@bloomberg.net Agnes Lovasz in Budapest alovasz@bloomberg.net.

Last Updated: August 28, 2005 19:12 EDT