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flag Hungary Hungary: Economic and Political Outline

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline

 

Economic Indicators

Folowing the crisis in the eurozone, the Hungarian economy entered recession in 2012, with the GDP contracting by 1.7%. It returned to positive growth in 2013 (0.2%) and should consolidate in 2014 (1.8%), sustained by a strong foreign demand while household demand still remains sluggish.

In 2012, the Hungarian economy sunk deeper into recession. The prime minister Viktor Orban's priority was to exit the European excessive deficit procedure, to which the country has been subject since the beginning of 2012. The 2013 budget included the introduction of new taxation (on financial transactions and telecommunication services), broadening the scope of tax on energy providers, introduction of a flat-rate tax on insurance plans and measures to improve tax collection. A reduction of state subsidies for pharmaceutical products and public companies is also to be implemented.

In May 2013, the country exited the European excessive deficit procedure which had been implemented against its will at the beginning of 2012. The Hungarian foreign trade has benefited from the weak forit and the dynamic German economy. The government has been pursuing an unorthodox policy of taxing multinational companies in order to fill up the state coffers. It has also simplified access to credit through a central bank's policy of reducing official interest rates. The state deficit should remain under 3% of teh GDP despite the elections. In addition to fiscal consolidation measures, the government has tried to stimulate employment implementing a reform of the labour market. Excessive household debt is a source of tension with the banking sector.

Although the unemployment rate has been falling (around 10%), the exodus of the most highly skilled young people remains a severe issue.

 
Main Indicators 20112012201320142015 (e)
GDP (billions USD) 137.72124.59132.26129.69e132.18
GDP (Constant Prices, Annual % Change) 1.6-1.71.1e2.82.3
GDP per Capita (USD) 13,791e12,544e13e13,154e13,433
General Government Balance (in % of GDP) -4.9-1.5-1.5e-2.5-2.8
General Government Gross Debt (in % of GDP) 82.179.879.3e79.1e79.2
Inflation Rate (%) 4.05.71.7e0.32.3
Unemployment Rate (% of the Labor Force) 11.011.010.38.27.8
Current Account (billions USD) 0.581.063.91e3.20e2.58
Current Account (in % of GDP) 0.40.93.02.52.0

Source: IMF - World Economic Outlook Database , Last Available Data

Note: (e) Estimated Data

Main Sectors of Industry

The agricultural sector, which was predominant in the country's economy for many years, now only represents 3.5% of the GDP and employs about 4.5% of the active population. The main crops are cereals, fruits, vegetables and wine.

The industrial sector contributes to almost 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 and employs over 65% of the workforce. It concentrates the bulk of FDI, especially in the fields of telecommunications, retail and finance.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 5.2 29.8 64.9
Value Added (in % of GDP) 4.4 30.2 65.4
Value Added (Annual % Change) 15.1 -2.2 3.5

Source: World Bank - Last Available Data.

 
 
 
Monetary Indicators 20092010201120122013
Hungarian Forint (HUF) - Average Annual Exchange Rate For 1 USD 202.34207.94201.06225.10223.70

Source: World Bank - Last Available Data.

 
 

Learn more about Market Analyses about Hungary on Globaltrade.net, the Directory for International Trade Service Providers.

Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
67.0/100
Position:
Moderately Free
World Rank:
51/178
Regional Rank:
24/43

Distribution of Economic freedom in the world
Source: 2014 Index of Economic freedom, Heritage Foundation

 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
6.63
World Rank:
37/82

Source: The Economist - Business Environment Rankings 2014-2018

 

Country Risk

See the country risk analysis provided by Coface.

 

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Foreign Trade in Figures

The Hungarian economy is very open, trade representing roughly 175% of the GDP (WTO average data for 2010-2012).

Hungary has traditionally maintained a negative trade balance. However, as an effect of the global recession, the volume of trade has decreased and the trade balance has became positive, due to imports falling more quickly than exports. In 2013, foreign trade benefited from the weak forint and the dynamic German economy. The trade surplus increased under the effect of exports rising more quickly (9.5%) than imports (6.9%). This trend should continue in 2014.

The European Union is by far Hungary's biggest economic partner (Germany and Russia in the lead), followed by China.

 
Foreign Trade Indicators 20092010201120122013
Imports of Goods (million USD) 77,76188,178102,44095,17699,814
Exports of Goods (million USD) 83,00895,483112,312103,927108,170
Imports of Services (million USD) 16,33115,33317,39915,79116,461
Exports of Services (million USD) 18,28519,21921,82220,24621,042
Imports of Goods and Services (Annual % Change) -14.710.14.5-3.35.9
Exports of Goods and Services (Annual % Change) -11.411.36.6-1.55.9
Imports of Goods and Services (in % of GDP) 71.077.381.480.681.2
Exports of Goods and Services (in % of GDP) 75.182.687.587.488.8
Trade Balance (million USD) 3,7383,4724,0723,8664,768
Trade Balance (Including Service) (million USD) 5,3606,9598,6768,73210,120
Foreign Trade (in % of GDP) 146.1159.9168.9168.0169.9

Source: WTO - World Trade Organization ; World Bank , Last Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2013
Germany 25.8%
Romania 5.7%
Austria 5.6%
Slovakia 5.4%
Italy 4.7%
See More Countries 52.9%
Main Suppliers
(% of Imports)
2013
Germany 25.0%
Russia 8.7%
Austria 6.7%
Slovakia 5.8%
China 5.4%
See More Countries 48.5%

Source: Comtrade, Last Available Data

 
 

Main Products

- bn USD of products exported in 2013
Motor cars and other motor vehicles principally...Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702) 6.9%
Parts and accessories for tractors, motor vehicles...Parts and accessories for tractors, motor vehicles for the transport of ten or more persons, motor cars and other motor vehicles principally designed for the transport of persons, motor vehicles for the transport of goods and special purpose motor vehicles of heading 8701 to 8705, n.e.s. 4.2%
Transmission apparatus for radio-telephony,...Transmission apparatus for radio-telephony, radio-telegraphy, radio-broadcasting or television, whether or not incorporating reception apparatus or sound recording or reproducing apparatus; television cameras; still image video cameras and other video camera recorders; digital cameras 3.9%
Spark-ignition reciprocating or rotary internal...Spark-ignition reciprocating or rotary internal combustion piston engine 3.8%
Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses incl. those in the form of transdermal administration or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006) 3.6%
See More Products 77.6%
- bn USD of products imported in 2013
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals, crude 4.5%
Petroleum gas and other gaseous hydrocarbonsPetroleum gas and other gaseous hydrocarbons 3.9%
Parts and accessories for tractors, motor vehicles...Parts and accessories for tractors, motor vehicles for the transport of ten or more persons, motor cars and other motor vehicles principally designed for the transport of persons, motor vehicles for the transport of goods and special purpose motor vehicles of heading 8701 to 8705, n.e.s. 3.9%
Transmission apparatus for radio-telephony,...Transmission apparatus for radio-telephony, radio-telegraphy, radio-broadcasting or television, whether or not incorporating reception apparatus or sound recording or reproducing apparatus; television cameras; still image video cameras and other video camera recorders; digital cameras 3.1%
Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses incl. those in the form of transdermal administration or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006) 2.7%
See More Products 81.8%

Source: Comtrade, Last Available Data

 
See More Products
More imports (Intracen Data)
More exports (Intracen Data)
 
 
 

Main Services

- bn USD of services exported in 2011
31.25%
25.79%
20.79%
6.12%
6.00%
4.72%
2.03%
1.70%
0.86%
0.59%
0.15%
- bn USD of services imported in 2011
38.21%
21.10%
14.37%
8.05%
5.86%
4.59%
2.71%
1.50%
1.30%
1.26%
1.02%

Source: Comtrade, Last Available Data

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Sources of General Economic Information

Ministries
Ministry of Agriculture and Regional Development
Ministry of Economy
CIA World Factbook
Statistical Office
Hungarian Statistics Office
Central Bank
Magyar Nemzetti Bank
Stock Exchange
Budapesti Értéktőzsde / Budapest Stock Exchange
Search Engines
Sharelook.hu
Google
Dmoz.org
Economic Portals
Napi Gazdaság - only in Hungarian
Heti Világgazdaság - only in Hungarian
Budapest Business Journal - in English
Piac és Profit - only in Hungarian

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Political Outline

Executive Power
Chief of state: Laszlo SOLYOM (since 5 August 2005).
Head of government: Prime Minister Gordon BAJNAI (since April 2009).
Cabinet: Council of Ministers prime minister elected by the National Assembly on the recommendation of the president; other ministers proposed by the prime minister and appointed and relieved of their duties by the president elections: president elected by the National Assembly for a five-year term (eligible for a second term); election last held 6-7 June 2005 (next to be held by June 2010); Prime minister elected by the National Assembly on the recommendation of the president; last election held in April 2009.
Legislative Power
Unicameral National Assembly or Orszaggyules (386 seats; members are elected by popular vote under a system of proportional and direct representation to serve four-year terms).
Elections: last held 9 and 23 April 2006 (next to be held in April 2010).
Main Political Parties
SZDSZ: Alliance of Free Democrats or SzDSz;
KDNP: Christian Democratic People's Party or KDNP;
FIDESZ: Hungarian Civic Alliance or Fidesz;
MDF: Hungarian Democratic Forum or MDF;
MSZP: Hungarian Socialist Party or MSz.
Current Political Leaders
President: Janos ADER (since since 2 April 2012) - Fidesz
Prime Minister: Viktor Orbán (since Mai 2010) - Fidesz
Next Election Dates
Presidential: 2017
National Assembly: 2015
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
64/180
Evolution:
8 places down compared to 2013

Source: Worldwide Press Freedom Index 2014, Reporters Without Borders

 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Free
Political Freedom:
1/7

Map of freedom 2014
Source: Freedom House

 

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Last Updates: October 2014