Hungary

A landlocked country with a large number of spa towns and hot springs
Home to Lake Balaton, the largest lake in Central Europe, Rubik’s cube and ballpoint pen.
An emerging strong EV hub thanks to the Chinese FDI

Total area: 93,028 sq km (smaller than Indiana)
Population: 9.7 million (2021)
Government type: Parliamentary democracy
Administrative division: 19 counties (called “varmegye”), 23 urban counties (called “megyei jogú város”), and 1 capital city (called “fovaros”)
Capital + other major cities: Budapest (1.7 million) + (Debrecen (199,000), Szeged (158,000), Miskolc (145,000), Pecs (139,000), Gyor (128,000)
Currency: forint (HUF)
Languages: Hungarian (official) 99.6%, other or unspecified 0.4%
Ethnicity: Hungarian 85.6%, Roma 3.2%, Germans 1.9%, undeclared 16.7%
Religion: Roman Catholic 37%, Calvinist 11%, Lutheran 2.2%, Greek Catholic 1.8%, other 0.5%, atheist 1.5%, unaffiliated 16.7%, undeclared 27.2%
President: (Mr.) Tamás SULYOK (since 26 February 2024)
Prime Minister: (Mr.) Viktor ORBAN (since 29 May 2010)
Date of EU accession: 1 May 2004

KEY FEATURES

Highly skilled and educated workforce
Central location positioning the country as an ideal gateway to Central/Southeastern Europe
Bordering seven other European countries
One of the least regulated economies in the CEE region
One of the most sought-after FDI destinations in Europe
Strong automotive, electronics and service sectors
The most developed biotech sector in the CEE region
The lowest corporate tax in the EU (9%)
Chinese closest ally in the EU

MACROECONOMIC OVERVIEW

Hungary, comparable in population and size to the Czech Republic, is one of the least regulated economies in the CEE region and one of the most attractive FDI destinations in Europe, with the lowest corporate taxes and highest VAT rates in the EU.

The country suffered severe consequences of the global economic crisis in 2009, partly caused by the reckless fiscal policy of the previous government with large current and fiscal account deficits, and an over-indebted private sector. A set of unorthodox economic policies known as “Orbanomics”, implemented since the current Prime Minister, Viktor Orbán, came to power in 2010, coupled with high inflows of FDIs and EU funds helped Hungary get back on the growing curve and the country has experienced strong growth for several years. GDP growth, which belonged to one of the strongest within the EU in 2018 and 2019, was largely supported by the surge in the disbursement of EU funds and rising disposable income. The strong growth contributed to the lowest unemployment rate in 30 years.

After a sharp drop of 4.5% in 2020 in the wake of Covid-19, the Hungarian economy got back on track the following year, growing by 7.1%. Although the economy contracted in 2023 as a result of high inflation and interest rates, it is expected to rebound in 2024 and 2025, driven by domestic demand, ongoing FDI and recovery of global demand. Inflation remains elevated in 2023 despite the government ininital efforts to cap fuel and staple food prices. The labor market remains resilient.

Selected economic indicators, Hungary, 2017 - 2023

		2017	2018	2019	2020	2021	2022	2023
GDP
Real GDP growth	%	4.3	5.4	4.9	-4.5	7.1	4.6	-0.9 (p)
GDP at current prices	€ bn	127.04	136.07	146.11	137.44	154.12	168.5	196.3
Foreign trade
Exports	€ bn	109.45	113.63	119.48	108.59	125.35	153.86	159.47
Imports	€ bn	100.3	107.78	116.1	105.73	124.18	160.83	149.43
Balance	€ bn	9.16	5.85	3.38	2.85	1.17	-6.96	10.03
Prices
CPI – average inflation rate	%	2.4	2.8	3.4	3.3	5.1	14.5	17.1
PPI – industry – average	%	4.6	6.1	3.9	0.8	16.9	53.1	21.5
Employment
Registered unemployment	%	4.0	3.6	3.3	4.1	4.1	3.6	4.1
Average monthly gross wage	€	1,082	1,220	1,280	1,195	1,278	1,372	1,609
Exchange rates*
USD/HUF average (HUF per USD)		274.27	270.41	290.71	307.99	303.14	372.59	352.91
EUR/HUF		309.28	318.89	325.35	351.25	358.52	391.29	381.8

Source: Hungarian Central Statistical Office, Hungarian National Bank, IMF, Eurostat, 2017-2023
* For the current exchange rate, please see www.xe.com

KEY SECTORS

The agricultural sector, which has been the dominant force in the country’s economy for many years, now represents 3.6% of GDP and employs approximately 5% of the working population today. Cereals, fruits, vegetables, and wine are the main crops.

Industry accounts for 25.4% of the country’s GDP and employs around 31% of the working population and is very open to foreign investment (manufacturing almost consistently ranks as the top receiver of foreign direct investment). The automotive and electronics sectors are the two main industrial sectors, representing 30% of exports and 15% of GDP.

The services sector contributes 55.5% of GDP and employs almost 64% of the labour force.

The country has excellent infrastructure, ready-made industrial sites, offices and science parks.

Automotive sector

Automotive is the backbone of the Hungarian industry, accounting for more than 20% of the country's GDP and directly employing 13% of the workforce in the manufacturing sector. Most production is destined to export, accounting for 21% of all exports. The country is home to four car companies (Audi, Mercedes, Suzuki, and Opel) that manufacture more than 400,000 passenger cars a year.

Electronics

This most productive sector in Central Europe accounts for 5.3% of GDP and employs over 110,000 people. Many of the world’s largest EMS companies have established their plants in Hungary. The country maintains a leading position in the manufacture of finished products.

ICT

The Hungarian ICT sector is a well-established and developed industry. The total ICT market in Hungary accounts for around 10% of the country’s GDP and employs 400,000 workers. The market is expected to grow further, under the influence of the private sector. Fierce competition has led to price and profit decreases in the hardware market.

Food and drink

The Hungarian food industry plays an important role in Hungary’s economy, with a total estimated value of almost EUR 9 billion. It represents around 14% of the total processing industries, buying 75% of the local agricultural produce, which accounts for 8.3% of Hungary’s total exports. The sector accounts for 5% of the GDP and employs 5% of the active population.

Biotechnology

Conditions in Hungary are conducive to the consolidation of the biotechnology industry (world-class primary research results, highly qualified researchers, outstanding traditions of the pharmaceutical industry, and strength in related industries). The leading Hungarian biotechnology companies target mainly export markets (the EU, USA, Japan). The country is the largest exporter of medicinal and pharmaceutical products in the region. The Life science sector accounts for 40% of Hungarian R&D spending and directly employs 14,000 people.

EXPORTS & IMPORTS

Hungary is one of the most open economies to international trade in Europe, in fact, Hungary’s exports/GDP ratio at around 81.3% is the eighth highest in the EU. The country exports mainly to Germany, Italy and neighbouring countries.

2023 export and import data:

Main import partners:
Germany – 22.6%
China – 6.6%
Austria – 6.1%
Poland – 5.8%
Slovakia – 5.4%

Main export partners:
Germany – 26.1%
Italy – 5.8%
Romania – 5.3%
Slovakia – 5%
Poland – 4.6%
Czechia – 4.5%

Market Research in Hungary

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