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Hungary Hungary

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Hungary – Quick View
ECR score59.67 (Mar 2011)
ECR rank47 (Mar 2011)
Economic
GDP (2010 Forecast)USD 130.18 billion
GNI per Capita at PPP (2010)USD 17,472.1
FDI inflow (2009)USD -5,717.75 million
Inflation (2010)4.5%
Central bank assets (January 2011)USD 47.83 billion
Unemployment rate (November 2010)11.3%
Government Deficit (January 2011)USD -593.96 million
Tax revenue40.5% of GDP
Political
Government typeParliamentary Republic
Recent political crisisNA
Economic freedom rank (2011)51st
Freedom of information rank (2010)23rd
Corruption perception index (2010)50th
Structural
Birth Rate10 per ‘000
Population BalanceUnder 14 – 15%
Population BalanceOver 65 – 16%
Life expectancy yearsMales - 69.2
Life expectancy yearsFemales - 77.4
Mortality Rate (2009)6 per ‘000
Literacy rate (2010)98.9%
Internet access61.8%

[Top] Economic Overview

Hungary has an open market economy. The country’s major trading partners are the OECD countries.

(Source: World Wide Tax)

Gross domestic product (GDP)

Hungary GDP (nominal) (HUF billion)

f=forecasted

(Source: Eurostat)

Hungary’s GDP registered an overall increase from HUF 23,755.50 billion in 2006 to HUF 26,094.80 billion in 2009. Furthermore, from 2010 to 2012, the figure is projected to rise steadily by almost HUF 1,200 billion.

Real GDP growth rate

Hungary Real GDP growth rate (%)

f = forecast

(Source: Eurostat)

Real GDP growth rate of the country sharply declined from 2006 to 2009. However, from -6.3% in 2009, the growth rate is forecasted to increase to 3% by 2012.

GNI per Capita, PPP

 The country’s GNI per Capita at PPP was USD 17,472.1 in 2010.

Hungary GNI per capita, PPP

(Source: UNDP)

Tax rate

Hungary has a progressive income tax system. The country’s personal income tax rate varies from 17% to 32%.

Income range (HUF)

Tax Rate

0 – 5,000,000

17%

5,000,001 and above

32%

(Sources: Tax Rates.cc)

Corporate tax is levied at 19% and VAT (Value Added Tax) is 25%.

(Sources: Tax Rates.cc)

Inflation

Hungary Inflation (%)

 

(Source: National Bank)

The nation’s inflation rate witnessed fluctuations from 2001 to 2010, and is currently 4.5%.

Foreign Direct Investment (FDI) Inflow

 

Hungary FDI inflow (EUR million)
(Source: Eurostat)                                                                                     

From 2006 to 2009, the country recorded the highest FDI inflow in 2007, with a value of EUR 52,328 million. However, from that year till 2009 there was a considerable decrease. But, in Q1 2010, the FDI inflow shows signs of recovery.

Central bank assets

Hungary Central bank assets (HUF billion)
(Source: National Bank)

Magyar Nemzeti Bank (MNB) is Hungary’s central monetary authority. The central bank assets from 2005 to 2007 stood at an average of about HUF 4,666.7 billion and from 2007 to 2010 the assets increased steadily at a growth rate of 11.46%. In January 2011, the assets amounted to HUF 9,890.20 billion.

[Top] Financial Indicators & Government Financial

Consumer price index (CPI)

Hungary Consumer Price Index

(Source: imf.org)

Hungary’s CPI showed a steady rise from 287.8 in 2004 to 356.6 in 2011 (January).

Money Supply

Hungary Money supply (HUF billion)

(Source: National Bank)

An overall increase is seen in MNB’s money supply or in terms of M1, M2 and M3 components.  In January 2011, M1, M2 and M3 were registered at HUF 6,427.31 billion, HUF 14,081.91 billion and HUF 16,232.24 billion respectively.

Official exchange rate

Hungary Exchange rate (HUF/USD)

(Source: National Bank)

Exchange rate (HUF/ USD) shows a fall from 2005 to 2007. From 172.61 in 2007 the rate has increased to reach 208.65 in 2010.

Government finances

Sovereign debt dynamics


Central government fiscal balance (HUF million)

 

2011 (Jan)

2010

Total revenue

1,079,715

1,626,000

Total expenditure

1,202,530

1,191,000

Fiscal Balance

-122,815

435,00

 
(Source: National Statistics)

In 2010, the central government’s fiscal balance recorded a surplus of HUF 435,000 million. However, in 2011, expenditure exceeded revenue, amounting to a fiscal deficit of HUF 122,815 million. 

Tax revenue

Tax revenue of the country is 40.5% of the GDP.

(Source: heritage.org)

Public debt

Hungary Public debt (HUF million)

(Source: Government Debt Management Agency)

Hungary’s public debt has increased steadily from 2005 to 2010. In 2010, debt level was registered at HUF 19,821 million. In January 2011, government debt is HUF 19,782.90 million.

Current account balance

Hungary Current account balance (HUF billion)

(Source: National Statistics Excel Sheet)

Hungary’s current account balance consistently recorded a deficit from 2006 to 2009.  However, in 2009 the deficit was drastically reduced to HUF 142.8 billion. In 2010 (Q3), balance experienced a surplus of HUF 551.3 billion. 

Balance of payments

Hungary Balance of payments (HUF billion)

(Source: National Statistics Excel Sheet)

Hungary’s balance of payments has remained negative from 2006 to 2010 (Q3). However, from 2008 to 2010 (Q3), the deficit declined from HUF 2,020.30 billion to HUF 717.7 billion.

[Top] Labour Force and Employment Overview

The Public Employment Service (PES) in Hungary is in line with the EU objectives stated in the Lisbon Protocol. This protocol aims at full employment, productivity in work and increased social inclusion. Additonally, the Hungarian PES also aims at reducing regional differences in labour market, promoting equal opportunities and supporting disadvantaged sections of labour. 

Additonally, Hungary has prepared a National Development Plan (NDP) to allot structural funds in the labour market. The plan distributes the allotted budget amongst sectors of the economy and detects improvement scope of geographic regions.

Unemployment rate

Hungary Unemployment rate (%)'

(Source: oecd.org)

Unemployment increased steadily from 7.4% in 2007 to 11.3% in 2010.

Minimum wage rate

In 2011, Hungary's minimum wage rate was HUF 78,000. 

(Source: fedee)

Level of unionisation

The unionisation level in Hungary is relatively low.  In 2005, it was only about 17.8%.

Hungary has 6 trade union confederations:

  • ASzSz (Autonomous Trade Union Confederation)
  • ESZT (Confederation of Unions of Professionals)
  • LIGA (Democratic League of Independent Trade Unions)
  • MOSz (National Federation of Workers’ Councils)
  • MSzOSz (National Confederation of Hungarian Trade Unions)
  • SZEF (Forum for the Co-operation of Trade Unions)

ASzSz represents employees in the chemical industry, and utility and transport sectors. MSzOSz covers the manufacturing industry and private services, and is inclined to the socialist party. SZEF covers employees mainly in the health and social services sectors. Finally, ESZT organises public sector employees in higher education and research institutes.

The country, under the National Public Service Interest Reconciliation Council, has a system of collective bargaining for the public sector, where representatives from trade unions, the central government and local governments are involved in wage negotiations.

(Sources: Eurofound.europa, ETUC, Autonomok)

[Top] Political Stability

Hungary's political system is a multi-party parliamentary republic. The system is based on the constitution formulated in 1949 and modified in 1989, which marked the end of the communist rule.

The state has a unicameral parliament of 386 members, of which 176 are elected from constituencies. The president, currently Pal Schmitt (2010), is the head of state and is elected for a five year term. 

The central government is headed by the Prime Minister. The Fidesz-party, elected in 2010, is the first party since the end of the communist era to rule without coalition. Recently, the Prime Minister has proposed that the government will be independent from the EU and the IMF in international negotiations.

Major political parties are:

  • Christian Democratic People's Party (KDNP)
  • Fidesz-Hungarian Civic Union (Fidesz)
  • Hungarian Socialist Party (MSZP)
  • Hungarian Democratic Forum (MDF)
  • SZDSZ-Hungarian Liberal Party (SZDSZ)

(Sources: Economist, BBC, eiu.com)

Regulatory environment

Hungary Economic Freedom Index

(Source: Heritage.org)

Hungary’s economy is ranked 51st on the 2011 Economic Freedom index, with a score of 66.6. The country stands 22nd among the 43 European countries.

(Sources: Heritage.org)

Corruption perception

The Corruption Perceptions Index (CPI) is a survey that measures the perceived level of corruption across countries worldwide. Hungary is ranked 50th on the 2010 index, with a score of 4.7 indicating that the country is perceived as moderately corrupt.

(Source: Transparency.org)

Freedom of information

In 2010, the nation ranked 23rd on the Press Freedom Index with a total score of 7.50.

The main newspapers circulated in the country are Magyar Hirlap, Nebszabadsag, Magyar Nemzet, Nepszava, Heti Vilaggazdasag, The Budapest Times and The Budapest Sun. 

(Sources: rsf.org, BBC)

Judicial system

Hungary’s judiciary is based on the Constitutional Acts XX (20) of 1949 and LXVI (66) of 1997. The highest judicial authority is the Supreme Court, followed by the Regional Courts of Appeal, the County Courts and the Local Courts.

The only non-adversarial court is the Constitutional Court. Separate from the judicial system, this court protects the constitutional order and ensures the independence of judges.  Furthermore it has the power to overrule parliamentary decisions. 

The Supreme Court hears appeals of special cases and ensures uniform application of law. The Regional Courts of Appeal deals with judgments that are against the decisions of County Courts and Local Courts. Hungary has five Courts of Appeal: Budapest, Pécs, Szeged, Debrecen and Győr. County Courts hear decisions against Local Courts and serve as Courts of First Instance in special cases. Finally, the Local Courts usually act as Courts of First Instance in commercial, civil and criminal cases.

The National Council of Justice ensures the independence of the judiciary by separating it from the executive. The council is also responsible for the administration of all levels of judiciary and maintains the authority to appoint and dismiss presidents and vice-presidents of Local and County Courts, as well as having the power to nominate judges.

(Sources: Interpol,Unidroit.info, lb.hu)

[Top] Demographic Overview

Hungary’s population in 2010 was registered at 10.01 million.

(Source: National Statistics)

Hungary Population ('000)

(Source: National Statistics)       

A steady decline in Hungary’s population was observed from 2001 to 2010.

Gender ratio at birth

The gender ratio is recorded at 105.9 male births (per 100 female births).

(Source: undp)

In 2009, the country’s 69% of the population lies between 15 to 64 years, followed by 16% in the age group of above 65 and the remaining 15% of the population lies under age of 15.

(Source: World Bank)

Mortality rate
Hungary Mortality rate (per '000)

(Source:Worldbank) 

Hungary’s mortality rate declined marginally from 8 (per ‘000) in 2006 to 6 (per ‘000) 2009.

Under-5 mortality rate

In 2010, the under-5 mortality rate was recorded at 7 (per 1000 births).

(Source: undp)

Birth rate

The birth rate in the country was 10 births per 1000 population in the year 2009.

(Source: World Bank)

Life expectancy

In 2010, the life expectancy at birth was recorded at 73.9 years. Specifically, the life expectancy for males was 69.2 years and 77.4 years for females.  

(Source: UNDP, UN)

Dependency ratio

In 2010, 45.2% of population was recorded as dependent.

(Source: undp)

Urbanisation                     

In 2010, 68.1% was classified as urban.

(Source: undp)

Human Development Index (HDI)

      The country is ranked 36th on United Nation’s 2010 Human Development Index. Thus, it falls in the category of ‘Very High Human Development.’ HDI integrates a country’s life expectancy, schooling and income. This signifies the overall social and economic development of a nation. A rank between 1 and 42 indicates ‘very high human development’ on UNDP’s Index.

(Source: undp)

[Top] Soft Infrastructure

Literacy rate

In 2010, the country’s adult literacy rate was registered at 98.9%.

(Source: UN)

Education

After the 1990 free multiparty elections, Hungary’s education system underwent many progressive changes. The system adjusted to socio-economic changes, incorporating innovation and modernization into its infrastructure.

In 2004, a medium-term educational strategy was implemented to reduce inequalities in the system, supporting ICT (Information, Communication and Technology) tools and reforming the basic infrastructure of schools.

Ten years of education is compulsory. Children have the choice to opt for vocational education thereafter. However, the vocational training system is underdeveloped.

Education is funded by public bodies and tuition fees paid by students. State support makes for 50-70% of education spending.

The HIER (“Hungarian Institute for Educational Research”) conducts social research on education.  The institute also offers teacher training and Ph.D. programmes on higher educational research. 

The challenges faced by the system are: developing more progressive educational content; modernizing the evaluation system; fund management; and making education more vocational and productive towards economic progress.

(Source: UNESCO)

Health

Privatisation of the system and better co-ordination between service providers and local authorities have improved the national healthcare service. However, the country’s healthcare status, as compared to other EU nations, is deficient due to low funding and an underdeveloped infrastructure.

The system is primarily funded through social insurance and taxes. 3% of personal income is contributed towards health insurance by employees. Furthermore, employers pay 15% of the employees’ salary and an additional tax for health insurance. 

Additonally, the HIF (“Health Insurance Fund”), supervised by the Ministry of Finance, collects national premium, which are distributed to local branches. Finally, Local governments are in charge of the planning and the budgeting of the local healthcare branches. The HIF also provides reimbursement facilities to healthcare service providers. These include fee-for-service and capitation fees provided to GPs (General Practitioners) and clinics.

The GPs lack professional training and do not perform adequate educational and preventive approaches to their service. The resources of the system are highly mismanaged, despite a surplus of resources, there are gaps in the average quality of healthcare.

[Top] Hard Infrastructure

Mass public transit

Means of mass public transport include: cars, buses and trains. The most common mode of public transport is the bus. Hungary is accessible by bus from most key European cities. Volán, the Hungarian coach company, runs coaches to 17 European nations through its partners. Additonally, some cities are equipped with trams and trolley buses.

Railway

Hungary’s railway network connects Budapest to 16 European capital cities. Additonally, there is a Suburban Railway Lines system connecting Budapest to significant suburbs.

The ‘Interpici’ trains run between other Hungarian towns.

Airway

There are 12 airports in the country, with Budapest Ferihegy Airport connecting Hungary to major global destinations. The other main airports are: Debrecen and Sármellék.

(Sources: Ministry for National Economy, Budapest.eu, Volan.eu, Railways and Tourism in Hungary, Aircraft Charter World)

Telecommunications

The State Secretariat for Communication is responsible for electronic communication, postal services, IT and audio-visual policy. The minister also ensures national broadband access and availability, looks into the development of the info-communication infrastructure, and co-ordinates functions of centralized IT services and controls.

Some of the major radio stations in Hungary are: Hungarian Radio, Class FM, InfoRadio, Neo FM and Juventus Radio. The main television channels are: Magyar Televizio (MTV), TV2, Duna TV, RTL Klub and Hir TV.

Vodafone, Pannon and T-Mobile are the main cellular service network providers operating in the country.

(Sources: Wireless Federation)

In 2010, 6.18 million people, accounting to 61.8% of the entire population, use internet services, increasing 763.8% throughout the past decade.

(Sources: Government of Hungary, BBC, Internet World Stats)

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