Industrial production was 10.5 percent higher in 1999 than the year before. The number one source of growth, like before, was the rapid, 22.9 percent expansion of exports, although this time the 1.7 percent growth of domestic sales also played an important part. The latest available order book data also seem to indicate the growth of domestic demand; the branches of industry producing the highest growth have a 21.8 percent higher order book value than the year before. According to an Ecostat survey conducted in March among the one hundred largest companies, none expect any decrease in domestic demand. Foreign prospects are even better; the number of companies assuming expansion in this respect grew 19 percent since February with none of the exports companies expecting a decrease.
Like before, the main engine of production growth was the export of multi-national companies producing electrical machines and instruments. Production within this branch rose by 55 percent and experienced an exceptionally high, 24.3 percent growth in domestic sales with exports soaring by 60.5 percent. Another industry leader” is road vehicle production, with an above average, 20.3 percent growth. Apart from that the production of textile and textile-based, rubber and plastic goods was near the industry average. Other industrial branches were characterized by slow growth, stagnation or slight recession. However, as a further sign of the industry-wide boom, in the second half of 1999 even those branches showed some growth which during the first six months of the year had a worse performance than before.
Based on all this – in case the Western European boom now in progress will continue to increase demand all year and the expected growth of domestic consumption indeed happens – the growth of industrial growth may again reach its 1998 rate and be as much as 112.0-112.5 percent.
Investments by transnational companies are likely to continue – bringing about not only a higher technical level of production structure, but also further and deeper integration with the EU. The expansion of small and middle-sized businesses (also receiving state subsidies), will further promote the European integratoin of nationally-owned firms. The competitiveness of a few energy-intensive branches (e.g. the chemical industry) will, however, be weakened by the sharp rise of energy prices a the beginning of the year.
The building and construction industry grew less last year than during the previous two years – only 6.4 percent. The main reasons of the slow-down is the slackening pace of state investments, and that waiting for the new forms of state support introduced this February, home-builders postponed a number of constructions. In the second half of 1999 construction and building output again started to rise. The volume of building completions had the fastest growth (25 percent), followed by mechanical installations (13 percent) and the construction of structure-ready buildings (2.7 percent). Viewed by geographical location, the differentiation in output – because of the discrepancies in demand – continued unabated. The fastest growth was registered in Northern Hungary (15 percent) and the Southern Plains (11 percent), which could be to some degree related to the reconstruction work following the damages caused last year by floods and inland water. Construction companies in Southwest Hungary had the slowest, 0.8 percent growth.
This year almost all external and internal causes slowing down demand are expected to disappear. As a result the output of the building industry could grow by as much as 7-9 percent. Real growth also depends on how far-reaching and prompt the introduction of new state subsidies for apartment construction will be. If things go well as many as 26 thousand new apartments could be built this year. –
