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THE ECONOMY OF HUNGARY
By
Diyan Mitev
GENERAL INFO
ON
HUNGARY
•Area: total: 93,030
sq km – 115rank
•Population:
9,930,915 (July 2008
est.)
•Birth rate: 9.59
births/1,000
population (2008 est.)
•Death rate: 12.99
deaths/1,000
population (2008 est.)
•Government type: parliamentary democracy
•Education expenditures: 5.5% of GDP (2005) – 48rank
HUNGARY ECONOMY 
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OVERVIEW
Hungary has made the transition from a centrally planned to a
market economy, with a per capita income nearly two-thirds that of
the EU-25 average.
The private sector accounts for more than 80% of GDP.
Foreign ownership of and investment in Hungarian firms are
widespread, with cumulative foreign direct investment totaling more
than $60 billion since 1989.
In 2007, Hungary eliminated a trade deficit that had persisted for
several years.
Inflation declined from 14% in 1998 to a low of 3.7% in 2006, but
jumped to 7.8% in 2007.
Unemployment has persisted above 6%.
Germany is by far Hungary's largest economic partner.
Policy challenges include cutting the public sector deficit to 4% of
GDP by 2008, from about 6% in 2007.
The government's austerity program of tax hikes and subsidy cuts
has reduced Hungary's large budget deficit, but the reforms have
dampened domestic consumption, slowing GDP growth to about 2% in
2007.
The government plans to eventually lower its public sector deficit to
below 3% of GDP to adopt the euro. (By 2011)
HUNGARY GDP
purchasing power parity: $191.7 billion (2007
est.)
 GDP (official exchange rate): $138.4 billion (2007
est.)
 GDP - composition by sector:
agriculture: 2.8%
industry: 31.5%
services: 65.8% (2007 est.)
 GDP - real growth rate: 1.3% (2007 est.)
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HUNGARIAN DEMOGRAPHICS
Labor force: 4.19 million (2007 est.) - -0.24 %
Growth Rate
 Unemployment rate: 7.3% (2007 est.) - -1.35 %
 Population below poverty line: 8.6% (1993 est.)
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INFLATION AND BANKING
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Inflation rate (consumer prices): 8% (2007 est.)
Budget: revenues: $64 billion - expenditures: $71.87 billion
(2007 est.)
Central bank discount rate: 7.5% (31 December 2007) –
53rank
Commercial bank prime lending rate: 9.09% (31 December
2007) – 104rank
Stock of domestic credit: $109.5 billion (31 December 2007)
– 42rank
Investment (gross fixed): 20.9% of GDP (2007 est.)
MAIN ECONOMIC SECTORS
Electricity - production: 37.66 billion kWh (2007
est.)
 Electricity - consumption: 37.11 billion kWh
(2006 est.)
 Electricity - exports: 10.69 billion kWh (2007 est.)
 Electricity - imports: 14.68 billion kWh (2007
est.)
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Oil - production: 32,580 bbl/day (2007 est.)
 Oil - consumption: 162,800 bbl/day (2007 est.)
 Oil - imports: 178,400 bbl/day (2005)
 Oil - exports: 66,660 bbl/day (2005)
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Natural gas - production: 2.545 billion cu m (2007
est.)
 Natural gas - consumption: 13.36 billion cu m
(2007 est.)
 Natural gas - exports: 138 million cu m (2007
est.)
 Natural gas - imports: 10.45 billion cu m (2007
est.)
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EXPORTS - IMPORTS
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Current Account Balance: -$8.018 billion (2007 est.)
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Exports: $87.77 billio
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Exports - partners: Germany 28.1%, Italy 5.6%, France 4.7%,
Austria 4.6%, Romania 4.5%, UK 4.5%, Slovakia 4.2%, Poland
4.2% (2007) n f.o.b. (2007 est.)
Imports: $86.88 billion f.o.b. (2007 est.)
Imports - partners: Germany 26.6%, China 7.8%, Russia 6.9%,
Austria 6.1%, Italy 4.5%, France 4.3%, Netherlands 4.3% (2007)
CURRENCY
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Exchange rates: forints (HUF) per US dollar - 186.16 (2007),
210.39 (2006), 199.58 (2005), 202.75 (2004), 224.31 (2003)
Reserves of foreign exchange and gold: $24.05 billion (31
December 2007 est.)
Debt - external: $125.9 billion (31 December 2007)
More Recent Economic Developments in
Hungary
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The Hungarian central bank raised its main rate of
interest by 3.0%, to 11.5%, as it attempted to stanch an
investment outflow and give support to its forint currency.
(Doubted to work)
The European Central Bank is lending Hungary up to 5.0
billion euros ($6.4 billion) to help support liquidity
"The government says that its financial system is in good
shape, but we note that Hungary is very vulnerable in
terms of large current account deficits and high external
debt load," ... "If pressure continues, an IMF program is
likely.“ – Brown Brothers Harriman
Lars Christensen (Denmark's Danske Bank ) - There are
clear similarities between Iceland and countries in Central
and Eastern Europe, such as strong credit growth, property
market bubbles, foreign currency lending. It's important to
underline that the Icelandic crisis has to do with the
collapse of the Icelandic banking sector. In contrast, the
banking sector in Central and Eastern Europe is foreignowned and that's positive.
THANK YOU FOR THE ATTENTION
Sources:
http://indexmundi.com/
http://english.mnb.hu/Engine.aspx
https://www.cia.gov/library/publications/the-world-factbook/
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