Hungarian GDP Growth Jumps to Fastest Since 2006 on CarsZoltan Simon and Marton Eder
Hungary’s economy expanded at the fastest pace in eight years in the second quarter as car production surged, diverging from flagging growth in the euro area and parts of eastern Europe.
Gross domestic product rose 3.9 percent from a year earlier, the most since the first three months of 2006, the Budapest-based statistics office said today in a preliminary report. The median estimate of 14 economists in a Bloomberg News survey was for 3.5 percent growth. GDP advanced 0.8 percent from the first quarter.
Prime Minister Viktor Orban, re-elected in April for a second four-year term, is overhauling the economy to focus on building the nation’s industrial base. Car manufacturers including Daimler AG and Volkswagen AG’s Audi unit have boosted output this year, helping bolster expansion.
“Growth in all likelihood will exceed 3 percent in 2014,” the Economy Ministry said in an e-mailed statement today. The country’s official forecast is for a 2.3 percent expansion. “Growth is outstanding even in the European context,” the ministry said.
The forint erased losses and was little changed at 313.52 per euro at 11:25 a.m. Budapest time.
Hungary’s growth momentum stands in contrast with that of the euro area and eastern European peers.
The recovery in the 18-nation bloc unexpectedly stalled in the second quarter as its three biggest economies failed to grow, underlining the vulnerability of the region to weak inflation and the deepening crisis in Ukraine. GDP in the three months through June was unchanged from the first quarter, according to Eurostat, the European Union’s statistics office.
In the EU’s east, the Romanian economy contracted and the Czech Republic’s stagnated, while Polish growth slowed as escalating sanctions between the EU and Russia disrupted foreign trade and limited new orders.
In Hungary, industrial production rose 11.3 percent from a year earlier in June, according to revised data published yesterday. That was the most since November 2010 and primarily due to car manufacturing.
“Growth was powered by industrial production and construction, while agriculture also performed quite well and the base effect also played a role,” statistician Pal Pozsonyi told reporters today.
Services, tourism and household spending also contributed to the upswing, the Economy Ministry said. It predicted that the country can maintain its pace of growth in the second half of the year.