The economy ministry attributed the drop in investments to the winding-up of the previous EU funding cycle, but noted that EU payments were already picking up in Q2 and should grow further during the year. Péter Virovácz of ING Bank also highlighted the importance of EU funding, falling investment level in the public sector and called the drop in corporate investments “troubling”.

Investments should grow in H2 but they could still be down by 15-20% for 2016, he added. Erste Bank chief analyst Gergely Ürmössy expects investments to continue falling in Q3, albeit at a slower rate.

In Q4 investments could stabilise, but this would still mean that investment would be down this year. Ürmössy said investments could start rising in 2017.

Gergely Suppan of Takarékbank said that despite the overall drop it is still encouraging that investments grew in some competitive market sectors. Investments could decline in Q3 and Q4 but at a slower rate than in the first two quarters of the year.

Republished with permission of Hungary Matters, MTI’s daily newsletter.