Investments on the rise again, based on EU funding

Altho150831_Beruházások_ENugh some improvement was expected after the fall in investments in Q1 (by 3.9%, according to the revised number), the 5.7% growth in the second quarter is clearly a positive surprise. As a result, investments were up 1.7% in the first half of 2015, and the annual average growth outlook for 2015 seems to be safely positive again.

Yet, not all is well with investments. The upturn is exclusively a result of the explosion in construction investments (10.1% growth, after the fall of 9% in Q1), implying that much of the improvement reflects an acceleration in the implementation of EU-funded investment projects, especially transport investments. Meanwhile, in manufacturing – a crucial sector which is relatively independent of EU funding – investment growth turned into decline, primarily indicating that the automotive-related investment wave is out of steam. At present, the ebbs and flows of EU-funded investments notwithstanding, investments seem to lack a robust driver of growth, which makes the near-term investment outlook rather uncertain.