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Hungary Economy Profile

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Economy - overview

Hungary has transitioned from a centrally planned to a market-driven economy with a per capita income approximately two thirds of the EU-28 average; however, in recent years the government has become more involved in managing the economy. Budapest has implemented unorthodox economic policies to boost household consumption and has relied on EU-funded development projects to generate growth.

 

Following the fall of communism in 1990, Hungary experienced a drop-off in exports and financial assistance from the former Soviet Union. Hungary embarked on a series of economic reforms, including privatization of state-owned enterprises and reduction of social spending programs, to shift from a centrally planned to a market-driven economy, and to reorient its economy towards trade with the West. These efforts helped to spur growth, attract investment, and reduce Hungary’s debt burden and fiscal deficits. Despite these reforms, living conditions for the average Hungarian initially deteriorated as inflation increased and unemployment reached double digits. Conditions slowly improved over the 1990s as the reforms came to fruition and export growth accelerated. Economic policies instituted during that decade helped position Hungary to join the European Union in 2004. Hungary has not yet joined the euro-zone. Hungary suffered a historic economic contraction as a result of the global economic slowdown in 2008-09 as export demand and domestic consumption dropped, prompting it to take an IMF-EU financial assistance package.

 

Since 2010, the government has backpedaled on many economic reforms and taken a more populist approach towards economic management. The government has favored national industries and government-linked businesses through legislation, regulation, and public procurements. In 2011 and 2014, Hungary nationalized private pension funds, which squeezed financial service providers out of the system, but also helped Hungary curb its public debt and lower its budget deficit to below 3% of GDP, as subsequent pension contributions have been channeled into the state-managed pension fund. Hungary’s public debt (at 74.5% of GDP) is still high compared to EU peers in Central Europe. Real GDP growth has been robust in the past few years due to increased EU funding, higher EU demand for Hungarian exports, and a rebound in domestic household consumption. To further boost household consumption ahead of the 2018 election, the government embarked on a six-year phased increase to minimum wages and public sector salaries, decreased taxes on foodstuffs and services, cut the personal income tax from 16% to 15%, and implemented a uniform 9% business tax for small and medium-sized enterprises and large companies. Real GDP growth slowed in 2016 due to a cyclical decrease in EU funding, but increased to 3.8% in 2017 as the government pre-financed EU funded projects ahead of the 2018 election.

 

Systemic economic challenges include pervasive corruption, labor shortages driven by demographic declines and migration, widespread poverty in rural areas, vulnerabilities to changes in demand for exports, and a heavy reliance on Russian energy imports.

GDP (purchasing power parity)
$289.6 billion (2017 est.)
$278.5 billion (2016 est.)
$272.5 billion (2015 est.)

note: data are in 2017 dollars

GDP (official exchange rate)
$139.2 billion (2017 est.)
GDP - real growth rate
4.58% (2019 est.)
5.44% (2018 est.)
4.45% (2017 est.)
GDP - per capita (PPP)
$29,600 (2017 est.)
$28,300 (2016 est.)
$27,600 (2015 est.)

note: data are in 2017 dollars

Gross national saving
25.7% of GDP (2017 est.)
25.8% of GDP (2016 est.)
25.3% of GDP (2015 est.)
GDP - composition, by end use
household consumption: 49.6% (2017 est.)
government consumption: 20% (2017 est.)
investment in fixed capital: 21.6% (2017 est.)
investment in inventories: 1% (2017 est.)
exports of goods and services: 90.2% (2017 est.)
imports of goods and services: -82.4% (2017 est.)
GDP - composition by sector
agriculture: 3.9% (2017 est.)
industry: 31.3% (2017 est.)
services: 64.8% (2017 est.)
Population below poverty line
14.9% (2015 est.)
Labor force
4.414 million (2020 est.)
Labor force - by occupation
agriculture: 4.9%
industry: 30.3%
services: 64.5% (2015 est.)
Unemployment rate
3.45% (2019 est.)
3.71% (2018 est.)
Unemployment, youth ages 15-24
total: 10.2%
male: 9.8%
female: 10.7% (2018 est.)
Household income or consumption by percentage share
lowest 10%: 3.3%
highest 10%: 22.4% (2015)
Distribution of family income - Gini index
28.2 (2015 est.)
28.6 (2014)
Budget
revenues: 61.98 billion (2017 est.)
expenditures: 64.7 billion (2017 est.)
Taxes and other revenues
44.5% (of GDP) (2017 est.)
Budget surplus (+) or deficit (-)
-2% (of GDP) (2017 est.)

note: Hungary has been under the EU Excessive Deficit Procedure since it joined the EU in 2004; in March 2012, the EU elevated its Excessive Deficit Procedure against Hungary and proposed freezing 30% of the country's Cohesion Funds because 2011 deficit reductions were not achieved in a sustainable manner; in June 2012, the EU lifted the freeze, recognizing that steps had been taken to reduce the deficit; the Hungarian deficit increased above 3% both in 2013 and in 2014 due to sluggish growth and the government's fiscal tightening

Public debt
73.6% of GDP (2017 est.)
76% of GDP (2016 est.)

note: general government gross debt is defined in the Maastricht Treaty as consolidated general government gross debt at nominal value, outstanding at the end of the year in the following categories of government liabilities: currency and deposits, securities other than shares excluding financial derivatives, and national, state, and local government and social security funds.

Inflation rate (consumer prices)
2.4% (2017 est.)
0.4% (2016 est.)
Central bank discount rate
0.9% (31 December 2017)
0.9% (31 December 2016)
Commercial bank prime lending rate
1.48% (31 December 2017 est.)
2.09% (31 December 2016 est.)
Stock of narrow money
$74.77 billion (31 December 2017 est.)
$55.48 billion (31 December 2016 est.)
Stock of broad money
$74.77 billion (31 December 2017 est.)
$55.48 billion (31 December 2016 est.)
Stock of domestic credit
$86.22 billion (31 December 2017 est.)
$69.76 billion (31 December 2016 est.)
Market value of publicly traded shares
$27.7 billion (31 December 2017 est.)
$22.4 billion (31 December 2016 est.)
$17.69 billion (31 December 2015 est.)
Agriculture - products
wheat, corn, sunflower seed, potatoes, sugar beets; pigs, cattle, poultry, dairy products
Industries
mining, metallurgy, construction materials, processed foods, textiles, chemicals (especially pharmaceuticals), motor vehicles
Industrial production growth rate
7.4% (2017 est.)
Current Account Balance
-$392 million (2019 est.)
$510 million (2018 est.)
Exports
$98.74 billion (2017 est.)
$91.6 billion (2016 est.)
Exports - commodities
machinery and equipment (55.8%), other manufactures (32.7%), food products (6.8%), raw materials (2.4%), fuels and electricity (2.3%) (2017 est.)
Exports - partners
Germany 27.7%, Romania 5.4%, Italy 5.1%, Austria 5%, Slovakia 4.8%, France 4.4%, Czech Republic 4.4%, Poland 4.3% (2017)
Imports
$96.3 billion (2017 est.)
$83.5 billion (2016 est.)
Imports - commodities
machinery and equipment 45.4%, other manufactures 34.3%, fuels and electricity 12.6%, food products 5.3%, raw materials 2.5% (2012)
Imports - partners
Germany 26.2%, Austria 6.3%, China 5.9%, Poland 5.5%, Slovakia 5.3%, Netherlands 5%, Czech Republic 4.8%, Italy 4.7%, France 4% (2017)
Reserves of foreign exchange and gold
$28 billion (31 December 2017 est.)
$25.82 billion (31 December 2016 est.)
Debt - external
$138.1 billion (31 December 2017 est.)
$131.3 billion (31 December 2016 est.)
Stock of direct foreign investment - at home
$290 billion (31 December 2017 est.)
$298.2 billion (31 December 2016 est.)
Stock of direct foreign investment - abroad
$212 billion (31 December 2017 est.)
$222.6 billion (31 December 2016 est.)
Exchange rates
forints (HUF) per US dollar -
279.5 (2017 est.)
281.52 (2016 est.)
281.52 (2015 est.)
279.33 (2014 est.)
232.6 (2013 est.)
Fiscal year
calendar year

Source: CIA World Factbook
This page was last updated on Friday, November 27, 2020

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