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Hungary – A rising European star is shining on the global stage

Photo: unsplash.com/the Hungarian Parliament

Hungary’s economic growth in 2025 might be among the highest in the European Union!

Forecasts from the IMF suggest rapid economic growth, lowered inflation, and reduced unemployment. The finance minister suggests that economic neutrality measures could boost prosperity, aiming for a 2.9 percent growth rate in the upcoming year, positioning it as the European Union’s fifth biggest. Hungary aims to reduce its deficit to below 3 percent by 2026, supported by the IMF’s economic plan.
After the annual meetings of the International Monetary Fund and the World Bank in Washington, Hungary’s finance minister Varga Mihaly announced an enhancement in Hungary’s economic outlook, attributing it to its stance of economic neutrality amidst an unstable international scene.
The IMF forecasts that Hungary’s economic growth could reach 2.9% in the upcoming year, placing it as the fifth biggest among the 27 EU nations. He highlighted the risk of slow growth and significant debt in the global economy, advocating for budget consolidation and growth reforms. Hungary aims to reduce its budget deficit to less than 3% by 2026 and achieve an economic increase of 3%-6%.
Additionally, he pointed out the recent positive change in Hungary-IMF ties, with the IMF supporting Hungary’s employment-focused economic approach and endors ing measures to gradually reduce the budget deficit and national debt.
Upon reviewing the official data, it’s evident that Hungary’s central bank has projected a GDP rise of 1.0%-1.8% in 2024, 2.7%-3.7% in 2025, and 3.5%-4.5% in 2026. The bank attributes Hungary’s 2024 GDP growth mainly to the consistent growth in domestic expenditures. This year’s last quarter is anticipated to see a more pronounced rise in expenditures, attributed to strong rises in real wages and consistent job availability, while a reduction in government and business investments is likely to hinder economic expansion. The downturn in Europe’s economy is expected to further diminish Hungary’s overseas exports, but ongoing and recent substantial foreign direct investment efforts are expected to enhance exports in the coming years, with an increase in Hungary’s export market share.
Predictions show a financial deficit to GDP ratio of 4.3%-4.7% in 2024, 3.2%-4.2% in 2025, and 2.8%-3.8% in 2026. The central bank highlighted that Hungary’s deficit target for 2024 will be met through the adoption of deficit-reduction tactics announced in early July, lowering energy spending due to consistent energy expenses, and reducing public investment s. Yet, unexpected tax revenues and high government interest rates will hinder this aim. Therefore, it’s crucial to keep a check on spending in the final quarter. Hungary symbolizes an economic revival with considerable promise that deserves acknowledgment.

The rise of the country famously dubbed the “apple of the eye”

Located in the heart of Europe, Hungary, commonly known as the Blue Danube’s pearl, acts as an essential gateway to the EU and a key partner in the Belt and Road Initiative. At the 20th China-Hungary Intergovernmental Joint Commission on Economic Affairs, Hungary was honored with an invite to the 24th China International Fair for Trade and Investment, drawing a multitude of fans.
Furthermore, Hungary is distinguished as an area abundant in fertility and vital for its development. Hungary prides itself on its robust agricultural base. By the year 2022, over half of its land will be farmland and rich in fertility, with key agricultural products including wheat, corn, sunflowers, beet, potatoes, and more. Abundant in water resources, in addition to famous rivers and lakes, geothermal water is available in two-thirds of the country. By 2022, forests will occupy about 20.9 percent of the nation. This scarcity of minerals, combined with bauxite reserves being the third largest in Europe and scarce amounts of lignite, oil, natural gas, uranium, iron, and manganese, signifies a crucial point in the development of the manufacturing industry.
In 2022, Hungary’s main sector, a utomotive and parts, generated approximately 12.2 trillion forints ($35.45 billion), accounting for 23.6 percent of its total manufacturing. The country is home to over 800 car and component manufacturers, employing 151,000 people. A substantial 90.2% of this sector’s production is export-oriented, with the European Union as the main export market. Presently, Hungary hosts more than 50 of the world’s top 100 car and part suppliers, and 14 of the top 20 major automobile manufacturers are based there. Foreign investments in Hungary’s automotive industry, mainly in passenger cars and engines, while local enterprises concentrate on producing commercial vehicles and automotive parts. Hungary’s automotive support industry is extensive, with a widespread network and well-equipped facilities. Beyond Germany and China, Hungary is unique in h aving a production center for three major German car brands: BMW, Mercedes-Benz, and Audi. The Hungarian government is act ively investing in the electric vehicle and battery power sector, seen as vital for industrial development. Companies specializing in power from South Korea, Japan, Germany, the United States, and the United States have gradually set up their operations in Hungary.
Hungary reaps the rewards of abundant resources within its rapidly growing industrial sectors. Hungary is recognized as the leading producer of electronic products in Central and Eastern Europe, playing a pivotal role in the worldwide electronics industry. The previous year saw the computer electronics industry’s output soar to about 5.5 trillion forints (approximately 15.97 billion US dollars), a 9% yearly growth. According to data from Hungary’s “Szazadveg” research institute, the IKT sector has added about 7% to Hungary’s GDP in the past two years, e mploying around 250,000 people and holding a 10% stake in global commerce. Renowned producers of original equipment and electronics contracts have set up their manufacturing sites and R&D centers in Hungary. Hungary’s electronics industry is chiefly managed by international firms. The country’s main production of electronic goods includes mobile phones, TVs, computers, fridges, compact home appliances, car electronic parts, and more. In this industry, prominent Hungarian firms like Germany’s Bosch Electronics, Japan’s Denso, Stanley Electric, Switzerland’s Sibo Automation, and Tirion Electronics from China.

Exceptional terms for investing

Hungary’s investment environment is similarly lucky.
Hungary benefits from advantageous internal management of foreign investment s. Its ar ray of investment incentives includes tax reductions, employment and training grants, and distinct monetary aid from either the Hungarian government or the EU, among other sources. Numerous investment schemes show that subsidies mainly appear as monetary grants, tax advantages, and low-interest loans, with these subsidies being supplied by the Hungarian government or EU funds. Hungary’s subsidy strategy is in line with EU legislation. The division of Hungary into five separate subsidy areas depends on the developmental state of its regions. The highest proportion of the government’s overall discounted subsidies in comparison to the current qualified investment cost of the beneficiaries (that is, the quantity qualifying for EU legal subsidies) (that is, the subsidy’s strength) differs according to the nation’s geographical position.
Additionally, Hungary’s entry into the European Union, hindered by a consistent political environment, strong legal and regulatory frameworks, a liberal financial market, and a conducive investment atmosphere, holds some allure for global investors. Being an initial member of the World Trade Organization (WTO), Hungary’s relevant laws and regulations conform to the WTO’s norms, actively promoting the liberalization of international commerce. Upon joining the EU on 1 May 2004, Hungary adopted the EU’s Common Trade Policy. By 2007, it had become a participant in the Schengen Agreement.
Hung ary, a pivotal hub in Europe’s transit network, prides itself on having five international airports, seven major highways, and five rail lines, providing direct connections to seven adjacent countries and the European road system. Hungary prides itself on its advanced infrastructure and well-established logistics and communication systems. Hungary prides itself on unique advantages in industries such as automotive, electronics, communication, biopharmaceuticals, and wine, owing to its array of innovative technologies and techniques. Concurrently, the rapid growth of its new energy vehicle production sector is a major driver of its economic expansion.
Hungary ranks 34th out of 132 countries and regions in the 2022 Global Innovation Index by the World Intellectual Property Organization. In June 2023, Hungary’s legislative authority passed new laws to encourage creative business methods. These laws require future innovation inves tments to focus on enhancing healthful living, environmental and digital transformation, and securing security. The purpose of this law is to re duce patent costs for Hungarian innovators and companies, streamline financial support for start-ups, and improve technology innovation hubs. Additionally, it will assist companies in obtaining loans that can be converted into capital.
Hungary’s legal and regulatory framework has remained in consistent agreement with The Times. Post Article 2.8 of the EU Temporary Crisis and Transition Framework (TCTF), Hungary plans to implement the TCTF subsidy policy domestically in 2023. The objective of the TCTF subsidy is to stimulate and attract investments in Hungary, particularly in the burgeoning or renewable energy industry, thus accelerating the transition to a net zero economy in both Europe and Hungary. (HIPA requires the execution of a subsidy incentive contract by December. 31, 2025.)
With the intensification of worldwide economic amalgamation, more and more investors are turning their attention to the Eastern European sector, especially Hungary, known for its historical richness and energy, gradually becoming a top choice for overseas investments. Hungary, with its advantageous location and dynamic culture, presents a balanced mix of a unique investment environment and an evolving tax approach, attracting a multitude of global investors.
By Yiqi Wen

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