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Hungary - Overview
Contents extracted from the comprehensive atlas of international trade by Export Entreprises
Copyright © 2012 Export Entreprises SA, Inc. All Rights Reserved.
Introduction
Capital:: Budapest
Area:: 93 km2
Total Population:: 10.022
Annual growth rate:: -0.00%
Density:: 112.00/km2
Urban population:: 68%
Population of Budapest (2.300), Debrecen (200), Miskolc (180), Szeged (165), Pécs (160)
Official language: Hungarian
Other languages spoken: Mostly English, German.
Business language: English is regularly used for business in Hungary, especially among multinational firms. However, Hungary’s smaller or state-owned firms may have principals who do not speak English. In this case, an interpreter may be used for meetings, though it is prudent to agree on this in advance. German is the second most common foreign language.
Ethnic Origins:: Hungarian - 92,3%; Roma - 1,9%; Other: 5,8%
Beliefs: Roman Catholic 51.9%, Calvinist 15.9%, Lutheran 3%, Greek Catholic 2.6%, Other Christian 1%.
Telephone codes:
To make a call from: 0
To make a call to: +36
To make a call from: 0
To make a call to: +36
Internet suffix:: .hu
Type of State::
Parliamentary democracy
Type of economy::
Upper-middle-income economy, OECD member, Ex-Transition country, Emerging Financial Market
A European crossroads; host country to company headquarters, to logistics services or research and development departments of numerous firms.
Economic overview
Hit by the financial crisis head-on, the country was saved from banckruptcy by the International Monetary Fund. After experiencing a deep recession in 2009, the country returned to a timid growth in 2010, estimated at 0.6% of the GDP and driven essentially by exports.
The newly-formed Orban government announced a 29-point stimulus plan, which aimed to stimulate the economy and reduce the budget deficit, especially through taxing financial institutions (this controversy lead to the premature department of the IMF and the EC). An emergency series of exceptional fiscal and parafiscal measures was also quickly passed, essentially affecting the energy, telecommunications and food distribution sectors.
The economic crisis has worsened the employment situation: according to estimations, in 2010 the unemployment rate increased to 10.8%.
The newly-formed Orban government announced a 29-point stimulus plan, which aimed to stimulate the economy and reduce the budget deficit, especially through taxing financial institutions (this controversy lead to the premature department of the IMF and the EC). An emergency series of exceptional fiscal and parafiscal measures was also quickly passed, essentially affecting the energy, telecommunications and food distribution sectors.
The economic crisis has worsened the employment situation: according to estimations, in 2010 the unemployment rate increased to 10.8%.
Main industries
The agricultural sector, which was predominant in the country's economy for many years, now only represents slightly less than 4.5% of the GDP and employs about 4% of the active population. The main crops are cereals, fruits, vegetables and wine.
The industrial sector contributes to one-third of the country’s GDP and is very open to foreign investors. Automobile and electronics sectors are the two main sectors given that they account for 30% of the country's exports and generate 15% of the GDP.
The services sector contributes nearly to two-thirds of the GDP.The global financial crisis had detrimantal effects on Hungarian industries that work on the external market but also on the national market where demand was reduced.
Foreign trade overview
The Hungarian economy is very open, trade representing roughly 160% of the GDP.
The trade balance is traditionally a deficit. However, as an effect of the global recession, the volume of trade has decreased and due to the fall in imports being quicker than the increase in exports, the trade balance became positive.
The European Union is by far Hungary's biggest economic partner (Germany and Russia in the lead), followed by China.
The trade balance is traditionally a deficit. However, as an effect of the global recession, the volume of trade has decreased and due to the fall in imports being quicker than the increase in exports, the trade balance became positive.
The European Union is by far Hungary's biggest economic partner (Germany and Russia in the lead), followed by China.
FDI
Hungary has the highest stock of foreign direct investments (FDI) in Central and Eastern Europe. The country was severely hit by the financial crisis and the FDI fluxes, which have very much decreased, have only been recovering slowly.
During the recent years, Hungary benefitted from a change in the direction of the FDIs, which went from low value textile and food industry sectors to the production of luxury vehicles, renewable energy systems, luxury tourism and information technologies.
The country’s strengths include: a tax system favorable to businesses, its geographic location as a bridgehead between Eastern and Western Europe.
During the recent years, Hungary benefitted from a change in the direction of the FDIs, which went from low value textile and food industry sectors to the production of luxury vehicles, renewable energy systems, luxury tourism and information technologies.
The country’s strengths include: a tax system favorable to businesses, its geographic location as a bridgehead between Eastern and Western Europe.
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