Hungary

Capital: Budapest

Local time:
It is %T:%M %A in Budapest

GDP growth rate: 2.9% in 2013

FDI stock: 91 933 million USD in 2010

Economic trends

Hit by the financial crisis head-on, the country had to apply for a loan from the International Monetary Fund. The government had therefore committed itself to carrying out structural reforms aimed at increasing competitiveness and to benefit from the German economic recovery (its main trading parner) in order to bring its budget deficit under 3% in 2011. A series of fiscal measures had also been urgently passed, esentially concerning the energy, telecommunications and food distribution sectors.

The country experienced a growth again in 2010, estimated at 1.2% of the GDP and essentially driven by a rise in consumption, the resumption of exports and of industrial produciton. This trend continued in 2011, with the growth rate of around 1.8%.

However, due to fears of a downgrade of its sovereign debt, because of the fiscal and economic policy conducted by the Hungarian government deemed "unpredictable", in November 2011 the country has once again turned to the IMF, in order to obtain in a credit line in early 2012. The Hungarian authorities have sent a similar request to the European Commission.

The economic crisis has also worsened the employment situation: according to estimations, in 2011 the unemployment rate increased to more than 11%.

Main branches of industry

The agricultural sector, which was predominant in the country's economy for many years, now only represents 4.3% 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 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 60% of the workforce. It concentrates the bulk of FDI, especially in the fields of telecommunications, retail and finance.

International trade

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.