HUNGARY’S economy expanded at its fastest pace since 2006 in the first quarter and growth was also strong in Poland and Romania, as exports to the eurozone flourished and domestic demand recovered.

    Concerned parts of the region — notably Poland — might suffer from the impact of the crisis in Ukraine, which entered its current acute phase at the start of March, were allayed as they benefited from a strong economic performance by key trading partner Germany.

    “The Ukrainian events have not had a really big impact on the foreign trade performance of the region’s countries so far ...” said David Nemeth, an economist at K&H Bank. “It was much more important to the region that German growth picked up in the first quarter, too.”

    The Polish economy, the region’s biggest and the only one to avoid recession since the 2008-09 global crisis, grew 3.3 percent year-on-year, beating forecasts for 3.1 percent growth.

    “There is potential for a positive jump in terms of private investment and private consumption,” said Grzegorz Ogonek, economist at ING Bank. “It seems ... this more than compensates for the negative effect of the situation in the east, which could, however, harm net exports over a number of quarters.”

    The data seemed, at least for now, to contradict predictions from many economists that Poland would pay a price for the tough stance its government has taken in opposing Russia’s intervention in neighboring Ukraine.

    “It is possible that the negative impact of the Ukrainian crisis (on Poland) may be visible only in 2H14, which, at this point, makes us cautious regarding upward revisions of economic growth,” Erste Group said in a note.

    Hungary’s economy grew by 3.5 percent in annual, unadjusted terms, its fastest growth since 2006 and driven by higher industrial output, construction and an increase in investments as well as in domestic demand.

    Romanian gross domestic product grew by 3.8 percent, also exceeding analysts’ expectations, after retail sales posted the second-highest growth rate in the EU in March according to Eurostat. Industrial output posted double-digit growth, led by manufacturing dominated by car makers.

    However, the Czech economy stagnated compared with the previous three months. On a year-on-year basis it expanded by 2 percent, slightly less than expected.

    Hungarian Economy Minister Mihaly Varga said Hungary had healthy export growth but domestic demand was also rising, as rising retail sales in past months showed.

    (SD-Agencies)