Hungary: Economic and Political Outline

Economic Overview

Hit by the financial crisis head-on, the country had to apply for a loan from the International Monetary Fund. The government had therefore committed itself to carrying out structural reforms aimed at increasing competitiveness and to benefit from the German economic recovery (its main trading parner) in order to bring its budget deficit under 3% in 2011. A series of fiscal measures had also been urgently passed, esentially concerning the energy, telecommunications and food distribution sectors.

The country experienced a growth again in 2010, estimated at 1.2% of the GDP and essentially driven by a rise in consumption, the resumption of exports and of industrial produciton. This trend continued in 2011, with the growth rate of around 1.8%.

However, due to fears of a downgrade of its sovereign debt, because of the fiscal and economic policy conducted by the Hungarian government deemed "unpredictable", in November 2011 the country has once again turned to the IMF, in order to obtain in a credit line in early 2012. The Hungarian authorities have sent a similar request to the European Commission.

The economic crisis has also worsened the employment situation: according to estimations, in 2011 the unemployment rate increased to more than 11%.

Main Sectors of Industry

The agricultural sector, which was predominant in the country's economy for many years, now only represents 4.3% of the GDP and employs about 4% of the active population. The main crops are cereals, fruits, vegetables and wine.

The industrial sector contributes to almost one-third of the country’s GDP and is very open to foreign investors. Automobile and electronics sectors are the two main sectors, given that they account for 30% of the country's exports and generate 15% of the GDP.

The services sector contributes nearly to two-thirds of the GDP and employs over 60% of the workforce. It concentrates the bulk of FDI, especially in the fields of telecommunications, retail and finance.

Source: World Bank - Last Available Data.

Indicator of Economic Freedom

Score:

66.6/100

Position:

Moderately free

World Rank:

47/179

Regional Rank:

21/42

Distribution of Economic freedom in the world
Source: 2011 Index of Economic freedom, Heritage Foundation

Note: The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Sources of General Economic Information

Ministries

Ministry of Agriculture and Regional Development
Ministry of Economy
CIA World Factbook

Statistical Office

Hungarian Statistics Office

Central Bank

Magyar Nemzetti Bank

Stock Exchange

Budapesti ÉrtéktÅ‘zsde / Budapest Stock Exchange

Other Useful Resources

Hungarian Investment and Trade Development Agency (ITDH)
National Association of Financial Entrepreneurs
Hungarian Banking association
Hungarian Financial Supervisor Authority

Main Online Newspapers

Népszabadság Online Hirszerzo
Magyarhirlap
Index
Hirszerzo

Economic Portals

Napi Gazdaság - only in Hungarian
Heti Világgazdaság - only in Hungarian
Budapest Business Journal - in English
Piac és Profit - only in Hungarian

Political Outline

Type of State

Parliamentary democracy

Executive Power

Chief of state: Laszlo SOLYOM (since 5 August 2005).
Head of government: Prime Minister Gordon BAJNAI (since April 2009).
Cabinet: Council of Ministers prime minister elected by the National Assembly on the recommendation of the president; other ministers proposed by the prime minister and appointed and relieved of their duties by the president elections: president elected by the National Assembly for a five-year term (eligible for a second term); election last held 6-7 June 2005 (next to be held by June 2010); Prime minister elected by the National Assembly on the recommendation of the president; last election held in April 2009.

Legislative Power

Unicameral National Assembly or Orszaggyules (386 seats; members are elected by popular vote under a system of proportional and direct representation to serve four-year terms).
Elections: last held 9 and 23 April 2006 (next to be held in April 2010).

Main Political Parties

SZDSZ :Alliance of Free Democrats or SzDSz;
KDNP : Christian Democratic People's Party or KDNP;
FIDESZ :Hungarian Civic Alliance or Fidesz;
MDF : Hungarian Democratic Forum or MDF;
MSZP : Hungarian Socialist Party or MSz.

Current Political Leaders

President: Laszlo KOVER (Interim since 2 April 2012) - Fidesz
Prime Minister: Viktor Orbán (since Mai 2010) - Fidesz

Next Election Dates

Presidential: 2015
National Assembly: 2015

Indicator of Freedom of the Press

World Rank:

40/179

Evolution:

17 places down compared to 2010

Source: Worldwide Press Freedom Index 2011, Reporters Without Borders

Note: The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position is assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).