Growth in Q4 was supported by market-based services and the construction sector, KSH said. The pace of growth accelerated from 3.9% in Q3. Adjusted for calendar effects, Q4 growth was up by 4.8%.

Reconciled data, adjusted for both seasonal and calendar effects, show GDP rose by 4.9%. In a quarter-on-quarter comparison, GDP growth was 1.3% in Q4, adjusted for seasonal and calendar effects. Unadjusted full-year growth was a hair under the official government target of 4%.

Commenting on the data, the economy ministry attributed about one percentage point of last year’s headline GDP growth to an agreement on wage rises it reached with employers and unions late in 2016.

Hungarians took home 1,100 billion forints (EUR 351.5m) more last year because of the 12.9% rise in wages and the 70,000 jobs added to the economy, the ministry said.

ING Bank chief analyst Péter Virovácz said favourable labour market trends paired with households’ increased propensity to make purchases had boosted consumption at the fastest rate in years in Q4. ING projects GDP growth of 3.9% in 2018, supported by a more balanced growth structure as new capacity expansions are completed, industry picks up and exports increase, he added.

Erste Bank senior analyst Orsolya Nyeste said the economic momentum could continue this year, helped by further strong absorption of EU funding and increased investments. Strong consumer confidence, the tight labour market, rising wages and moderate inflation point to increased household consumption, she added.