In Bulgaria and Romania per capita spending base is around €20 in 2010, in contrast to almost €200 in the Czech Republic.
more...
|
|
|
"From the beginning of the project, PMR was a professional partner who listened to our needs and catered their proposals according to our needs, their strengths and our budgetary constraints. [...]"
Director of Sourcing, Global marketer of consumer and commercial products
|
|
|
 | |
We are a member of the Strategic and Competitive Intelligence Professionals (SCIP)
|
 |
|
|
We are a member of the European Association of Opinion and Marketing Research Professionals ESOMAR.
|
|
|
|
 |
| Why to enter this market? |
- Fifth highest per capita GDP in the region
- Developed infrastructure
- EU membership
- Education and R&D base
- Relatively low employment costs
- Skilled workforce
- Accessibility of EU funds
- Strong domestic market
- Existing supplier base
- Industrial tradition
- Proximity of Austria, the Czech Republic, Slovakia, Romania and the Balkans
- Corporate tax rate of 16%
|
Economic and Business Environment
The business environment in Hungary is favourable in terms of paying tax, as the country offers a relatively low corporate tax rate of 16% and VAT rates of 20% and 5%, whereas personal income tax is charged at two bands, of 18% and 36%. In comparison with other countries in Central and Eastern Europe, the low tax rates are one of the country’s most substantial advantages in terms of doing business, particularly given that it is a member of the EU and a stable democracy, despite occasional political problems.
Between 2000 and 2008, average annual GDP growth in Hungary was almost 4%. However, in 2007, economic growth declined to 0.8% and continued at the same level during the following year. The ensuing recession in 2009 resulted in a 6.9% reduction in GDP, whereas 2010 brought a much needed change of pace and the economy grew by 1.1%, after a boost from exports, particularly to Germany. Growth is expected to pick up in 2011, and GDP is expected to increase by approximately 2.8%. Hungary’s inability to repay its short-term debt led Budapest to ask for financial assistance from the IMF, the EU and the World Bank. This resulted in an assistance package worth more than EUR17 billion. The country's economic problems were caused by the global economic downturn, which adversely affected exports and reduced domestic consumption, trends exacerbated by the government’s austerity measures. In 2010, the new FIDESZ government implemented a number of changes, including reductions in business and personal income taxes, but imposed “crisis taxes” on financial institutions, energy and telecoms companies and retailers.
The inflation rate in Hungary fell considerably at the beginning of this decade, from 14% in 1998 to 3.9% in 2006. However, after increases in tax and food prices, inflation had increased to 8.0% by 2007 and remained high in 2008, at 6.2%. As a result of the crisis, it fell to 4.2% in 2009 and 4.9% in 2010. For 2011, the IMF forecasts an average inflation rate of 4.1%.
The Hungarian currency has been fully convertible since 1996. The exchange rate of the Forint (HUF) remains relatively stable in comparison with the currencies of other Central and Eastern European currencies, but it was significantly affected by the economic crisis, as it weakened from HUF 251 per Euro in 2008 to HUF 310 per Euro in 2009. It recovered during the second quarter of 2009, however, and the exchange rate has fluctuated around HUF 270/1 EUR since then.
The unemployment rate was 7.8% in 2008 but it increased to double figures – 10.1% in 2009 and 11.1% in 2010 – as a result of the crisis. It is expected to remain at approximately the same level – 11.2% – in 2011. However, the national unemployment figures tend to hide discrepancies in the distribution of the workforce. In the Budapest-Gyor-Szekesfehervar triangle, where the majority of foreign investment is concentrated, a shortage of qualified employees can be observed and some companies, such as Nokia and Suzuki, employ ethnic Hungarians living on the other side of the Slovakian border, whereas others transport employees by bus from eastern Hungary. One of Hungary’s economic problems is the fact that the population is not very mobile, as most people spend their entire lives within 30 km of where they were born. As a result, 70-90% of people are unemployed in some villages.
The main factors which contribute to the investment attractiveness of Hungary are its developed infrastructure and its focus on advanced technologies and innovation in the production of goods. Germany is the most important investor and is responsible for 30% of all FDI. It is followed by the Netherlands (18%) and Austria (11%). The United States has been the largest non-European investor (5%), and in many cases the investments pass through the Netherlands and other European countries.
In 2010, the value of exports from Hungary increased by 14.1% and that of imports by 14.4% in comparison with 2009. The next few years are expected to bring a substantial increase, as the global economic situation improves. One of the reasons for the contraction in Hungary’s international trade is the concentration of vehicle factories in the country.
Infrastructure
Hungary’s roads are 197,519 km long in total. Approximately 38% of all roads in the country (74,993 km) are paved, and the other 62% (112,526 km) are unpaved. The condition of the road infrastructure in Hungary is regarded as good, although there are only about 911 km of motorways. The total length of the railways in Hungary is 9,208 km, and railways are one of the most important means of transport for long-distance freight. This industry has been privatised, as has road transport. There are 22 airports with concrete runways in Hungary, but Ferihegy-Budapest International Airport is the country’s main airport.
In 2010, almost 62% of the population had access to the internet and there were over 11.8 million mobile phones. At the end of 2007, the country’s broadband penetration rate was 17%, the highest in the region, and the figure increased to 19% in 2008.
Hungary is a landlocked country, situated in the middle of Europe, which shares borders with Austria (366 km), Croatia (329 km), Romania (443 km), Serbia and Montenegro (151 km), Slovakia (677 km) Slovenia (102 km) and Ukraine (103 km).
Hungary is divided into 19 counties. In addition, the country’s capital – Budapest – is independent of any county government. There are also 23 cities with county rights, to which the authorities have granted powers but which still belong to the territory of the relevant county and are not independent.
Social environment
Hungary has a population of 9.97m, but the number is falling: the population growth rate is -0.17%.
Although Hungary was, because of its fluid borders, a multicultural country for centuries, the current ethnic mix in Hungary is stable, and the majority are ethnic Hungarians – 92.3% (9.2m people). The Roma are the largest minority in Hungary, but there are only 0.19m (1.9% of the population). Other ethnic groups in Hungary include Slovaks and Ukrainians. The official language in the country is Hungarian.
Administrative control of the education system in Hungary is decentralised, and responsibility is shared among central (national), local (regional) and institutional bodies. Local councils manage pre-primary, primary and secondary education and enjoy a reasonable degree of autonomy in terms of organisation, functioning and budgets. There are both state and private institutions, and they receive funding in accordance with the same criteria. The general stage of education lasts until the age of 16 in Hungary. There are over 30 universities in the country.
Political environment
Hungary is a democracy with a single chamber Parliament – the 386 member National Assembly. The Head of State is the President, who is elected by a two-thirds majority vote by Parliament for a term of five years. If no two-thirds majority is reached, a simple majority is sufficient in the third round of the election. No president may serve more than two terms in office. The role of the President is largely ceremonial but includes powers such as appointing high-ranking officials and choosing the date for Parliamentary elections. The President is also nominally the Commander-in-Chief of the Armed Forces. The current President is Dr. Pal Schmitt, who was elected on 6 August, 2010 and who is eligible to run for the presidency again in 2015
The National Assembly elects a Prime Minister in accordance with a parliamentary majority and approves the government’s programme. Parliamentary elections are held every four years, with the next elections expected to take place in 2014. The Prime Minister has a leading role in the executive branch in the selection of Cabinet ministers and retains the right to dismiss them.
Hungary joined NATO in 1999 and the European Union in 2004. In the first half of 2011, the country holds the presidency of the EU.
General Data
Area: 93,030 sq km
Population: 9.97 m (2010)
Capital: Budapest
Language: Hungarian
National boundaries: Austria (366 km), Croatia (329 km), Romania (443 km), Serbia (166 km), Slovakia (676 km), Slovenia (102 km), Ukraine (103 km)
Ethnic groups: Hungarians (92.3%), Roma (1.9%), others (5.8%)
Major economic indicators
| |
2007 |
2008 |
2009 |
2010 |
2011f |
| GDP (EUR bn) |
101.1 |
105.4 |
82 |
82.9 |
85.2 |
| Population (m) |
10.1 |
10.1 |
10 |
9.97 |
9.97 |
| GDP per capita (EUR) |
10048 |
10483 |
8166 |
8255 |
8484 |
| GDP (constant prices y-o-y %) |
0.8 |
0.8 |
-6.7 |
1.1 |
2.8 |
| Exports, real, y-o-y (%) |
15.9 |
4.6 |
-9.6 |
13.8 |
8.9 |
| Imports, real, y-o-y (%) |
13.1 |
4 |
-14.6 |
11.9 |
9.4 |
| CPI (average, y-o-y %) |
8 |
6.2 |
5.6 |
4.2 |
3.9 |
| Central bank reference rate |
7.5 |
10 |
9 |
7 |
|
| Monthly wage, nominal (EUR) |
736 |
799 |
638 |
649 |
|
| Unemployment rate (%) |
7.4 |
7.8 |
10.1 |
11.1 |
11.2 |
| Net FDI (EUR bn) |
0.8 |
2.6 |
1.4 |
1.5 |
|
| FDI % GDP |
0.8 |
2.5 |
1.7 |
1.8 |
|
| FX reserves (EUR bn) |
16.4 |
24 |
29 |
25 |
|
| Exchange rate to USD AVG |
183.33 |
171.09 |
242.06 |
198 |
196 |
| Exchange rate to EUR AVG |
251.31 |
251.66 |
284.8 |
276 |
274 |
Last update: Q1 2011
Useful data
Currency: Hungarian Forint (HUF)
Exchange rate: 1 HUF=0.00366 EUR (2011)
Time zone: CET, CEST
Area code: +36
If you would like to find out more on the Hungarian market opportunities please do not hesitate to contact us directly:
tel. (48 12) 292 22 50
fax (48 12) 292 22 99
e-mail: info@pmrconsulting.com
PMR Business Solutions in Hungary
Market reports Hungary
To purchase or find detailed information on PMR Publications reports covering the general economy, construction, retail, pharmaceutical, and ICT sectors in Hungary.
If you are looking for greater detail trust our research and consulting divisions to carry out projects tailored to your business needs.
Consulting in Hungary
PMR Consulting offers a wide range of consulting services in Central and Eastern Europe for foreign companies interested in the region. The typical projects include: competitive intelligence, sourcing, strategic advisory, consulting at foreign direct investments and mergers & acquisitions.
Market research in Hungary
PMR Research offers a full array of qualitative and quantitative research methodologies, providing services such as customer satisfaction studies, brand awareness and brand image research, distribution and competition studies, segmentation and sector analyses.
Case studies for Hungary
Albania | Bosnia & Herzegovina | Belarus | Bulgaria | Croatia | Czech Republic | Estonia | Hungary | Latvia | Lithuania | Macedonia | Montenegro | Poland | Romania | Russia | Serbia | Slovakia | Slovenia | Turkey | Ukraine
|
|
