Hungary recovery – but not yet
By Sandy Guthrie06 June 2011
The Hungarian construction market's recovery will begin in 2012, despite a very weak 2010 and a poor start to 2011, according to a report from research company PMR.
Public infrastructure projects will be the main driver of this growth, it predicted.
The first edition of PMR's report, Construction Sector in Hungary 2011 - Development Forecasts for 2011 to 2013, suggests a moderately bright outlook for the construction market for the years 2012 and 2013.
It added, though, that this would partially be as a result of the low comparative base rate that will result from a weak 2010 and 2011.
In 2010, total construction output in Hungary fell by nearly 10%. The monetary value of construction output was just under HUF 1800 billion (€ 6,7 billion).
PMR said that although it could not be said that 2011 would be a good year for the construction industry in Hungary, economic growth was expected. This should serve to stimulate the construction sector towards the end of the year.
However, overall for 2011, PMR analysts expect a single-digit year-on-year decline in construction output. From this year-on-year perspective, a return to growth should occur in 2012, although this will be minimal. Stronger growth is expected in 2013, and PMR said this would be driven in no small part by the realisation of projects financed using EU funds.
As with almost all industries, the building materials industry has been hard-hit by the economic crisis. PMR said that since the downturn in mid-2008, the industry had suffered double-digit year-on-year declines in output.
In 2010, cement consumption in Hungary fell to approximately 2,5 million tonnes, down from 4 million tonnes in 2008. The 2010 figure is also similar to that recorded way back in 1992. PMR does not expect a significant upturn to take place until 2012, and even this will be modest at around 2 to 4%.
It said that in the next few years, public infrastructure projects would provide the majority of demand in the construction industry and this would predominately be through the New Szechenyi Plan, which is aimed at improving the competitiveness of Hungary as a country.
Between 2011 and 2014, the programme will see HUF 7000 billion (€ 25,4 billion) allocated for innovation and advancement in the areas of housing, business development, the health sector, employment and transportation.