Market Report, "Hungary Infrastructure Report Q2 2014", Published

Recently published research from Business Monitor International, "Hungary Infrastructure Report Q2 2014", is now available at Fast Market Research


Boston, MA -- (SBWire) -- 04/02/2014 --We have revised up our growth estimate for Hungary's construction sector in 2013 to 5.9%, from 3.5% previously, on the back of positive Q113-Q313 data published by the Hungarian statistical authorities. Although some of this can be attributed to low base effects, we believe a recovery has taken hold following a challenging few years for the sector. Over the coming quarters we expect the sector to benefit from an improving macroeconomic picture, returning consumer confidence and a tentative recovery in the banking sector. We also highlight the energy sector as a likely outperformer, with developments in the nuclear sector posing major upside risks to our longer-term forecasts.

We expect growth over the next few years to be subdued and we are forecasting average industry growth of 2.0% between 2014 and 2018, with the country's weak business environment remaining a key drag on industry growth. Persistent weakness in the residential and non-residential sectors will also weigh on the wider sector's growth prospects.

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Key Trends And Developments

- There has been a pick-up in construction activity in Hungary during the past few quarters, driven primarily by government efforts to use funds, allocated by the EU, for infrastructure development. The country risked losing the funding if it were not used before end-2013 and the start of the new funding cycle. This drive has been reflected in improving quarterly growth numbers for the construction sector, which saw real terms year-on-year increases of 5.8% and 7.2% in Q213 and Q313 respectively. One project to go ahead is the modernisation of infrastructure around Lake Balaton (a popular tourist resort) - announced by the Hungarian national rail company MAV in October 2013 - which will include the upgrading of the line running between Szekesfehervar and the Croatian border.
- The biggest developments in Hungary's construction sector in recent months have been in the energy sector. By far the most significant of these was the announcement in February 2014 that the Hungarian government had given clearance to the Russian government to construct two new nuclear reactors at the nuclear power plant in Paks. We have long held a cautiously optimistic view that the construction of a nuclear facility would be the main driver of longer-term growth in Hungary's power sector and the news gives credence to this. The Russian government is expected to cover about 80% of the project's construction costs with a loan of up to EUR10bn (US$13.6bn).

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