Economic Figures in Hungary

Economy in Hungary

In this post we review the main Hungarian economic data, very useful for potential investors or people you intend to settle in this country.

Hungary went through a transition from a centrally planned economy to a market driven economy with an income per capita that is 2/3 of the average income of the EU countries. Hungary joined the EU in May 2004 and is continuously showing a strong economic growth with a private sector accounting for more than 80% of the Hungarian gross domestic product (GDP).

The foreign ownership and investment in the Hungarian companies is significant and the accumulated foreign direct investment (FDI) in total rose to more than 100 billion dollars since 1989. Hungary issue public debt with high investment grade and yield. The current government have announced and started to implement a convergence programme supported by the EU with the objective to solve the fiscal deficit and the current account balance heading towards the adoption of the Euro.

Main Interest data

• GDP – (purchasing power parity, PPP): 98 071 million EUR (2013)
• GDP – Real growth rate: 3,2% (1Q 2014)
• GDP – per capita (based on PPP): 9 900 EUR (2013)
• GDP – sector: agriculture: 3.3%, industry: 32.4%, services: 61.2%
• Labour force: 4,2 million
• Labour force – per occupation: agriculture: 5.5%, industry: 33.3%, services: 61.2%
• Unemployment rate: 7,8% (April 2014)
• Inflation rate (Consumer Price Index): 7,8% (May 2014)
• Investment (gross fixed): 21,9% of the GDP
• Public debt: 79,2% of the GDP (2013)
• Agriculture (products): wheat, corn, sunflower seeds, potatoes, sugar-beets, pigs, cattle, sheep, poultry (hen, chicken, duck, goose and turkey) and dairy products
• Industrial sector: mining, metallurgy, construction materials, processed foods, textiles, chemicals (especially pharmaceuticals), motor vehicles, information technology, IT products and software
• Current account balance: 6.015 million EUR (2013; 6,13% of the GDP)

Important Factors To Consider

Economic factor

Hungary is a member of the European Union since 2004 and has shown a moderate economic growth. The inflation in the earlier years had a slight upward trend so the government is taking steps to lower it as it is an essential condition for the future adoption of the Euro. The conditions require inflation under 2.4%, a public deficit lower than 3% of the GDP and a debt lower than 60% of the GDP; these requirements must be fulfilled 2 years before joining Eurozone. Achieving the targets Hungary could adopt the single currency in the future. With the arrival of the Euro the country would experience the same phenomenon that happened in Spain: significant increase in the property prices which makes the investments in the current market very attractive.

Financial Factor

Hungary enjoys a solid and mature financial system. The banking system went through a huge development since the nineties, when the great reforms started driven by the privatization and the foreign banks.

Business Factor

Hungary enjoys a free market economy with free movement of capital, fiscal and monetary freedom, right to ownership and labour freedom. The banking sector is competitive and the foreign investments represent more than 80% of its capital. The capital markets are adequately developed and the foreign investments can engage freely and securely supporting the transactions.

Demographic Factor

The number of inhabitants in Hungary is around ten million with another three million in the neighbouring countries. 63% of the total population live in cities with two million located in Budapest which is 20% of the total population. This number is continuously growing thanks to the huge employment demand of the capital.

For more information on the Hungarian economy, contact us. We are the management company reference real estate in Budapest.