Hungary

hungary

Quick facts:

Territory 93,030 km2
Population 9.9 million (2013)
Currency Hungarian forint (HUF)
Capital Budapest
Official language Hungarian
Memberships UN, EU, NATO, OECD, Schengen Zone, the Visegrad Group (V4)
Real GDP per capita 8,800 EUR per inhabitant (2012)
Growth of GDP, % -1.7% (2012). Forecast: 0.7% in 2013, 1.8% in 2014, 2.1% in 2015
Average gross salary 200,501 HUF /ca 697 EUR (Dec 2012)
VAT rate 27% – general rate, 18% on milk & dairy products, cereals, flour, bakery etc. and 5% – medicines, books and some other product categories.
Company Income Tax 19% or 10%
Phone code +36
Top domain .hu

Hungary enjoys a perfect geographical location in the Centre of Europe; it has a well-developed business infrastructure and competitive taxation and investment policies which makes it a perfect manufacturing, service and logistics base.

Following the collapse of the Soviet Bloc in 1989, Hungary made quite a successful transition to a market economy. The country’s economy sustained stable growth, at around 4%, for many years from 2000, although it slowed down in 2007 and 2008. In 2008, Hungary received financial assistance worth EUR 17 billion from the IMF, EU and World Bank. The economy contracted by a further 6.7% in 2009, prior to slowly picking up from 2010, when it increased by 1.2%.This was due to a series of governmental reforms including drastic austerity measures consisting of a change in the taxation system. Inflation witnessed a slight decrease during the economic downturn, to 4.9% in 2010, due to low consumption levels.

Prior to the crisis, Hungary had managed to attract high amounts of FDI every year, building one of the highest stocks among the CEE countries. The key investment sectors include: automotive, aeronautic & aerospace, biotechnology & pharmaceuticals, biotechnology, electronics, food, renewable energy, IT services, logistics, shared service centres and medical technology.

Mining, metallurgy, building materials, textiles, processed foods, pharmaceuticals, automotive, electronics and agriculture are Hungary’s main economy sectors.  According to Reed Electronics Research (Aug 2013), Hungary is the largest producer of electronics (mainly, electronics used in mobile communication technology, nano-electronics, medical devices, automotive electronics) in Central and Eastern Europe, with a share of 25% of the total output.

The country ranks 37th (very high) in the Human Development Index (data of 2013). In 2012, Hungary’s GDP per capita was around 65% of the Eurozone average. The country plans to adopt the Euro but has no specific deadline, as it firstly needs to achieve a much higher GDP. In 2012, the Hungarian GDP in market prices was worth 96.9 billion EUR.

According to the European Commission forecast, during 2014-2015 the Hungarian economy will grow a 1.8% – in 2014; and a 2.1% – in 2015.