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Europe

Hungary
Last reviewed: 14 October 2009

Country information

HUNGARY TODAY

Country Facts

Area: 93,030 sq km (35,920sq miles)
Population: 10.1m (108 per km) (2005)
Capital City: Budapest (population: 2m)
Languages: Hungarian 98.2%, other 1.8%
Religion(s): Roman Catholic 67.5%, Calvinist 20%, Lutheran 5%, Jewish 5%, atheist and other 2.5%
Currency: Forint
Major political parties: minority Socialist government: Hungarian Socialist Party (MSzP), Opposition: Alliance of Free Democrats (SzDSz); Federation of Young Democrats-Hungarian Civic Party (FIDESZ), Hungarian Democratic Forum (MDF) , Christian Democratic Party (KDNP).
Government: Unicameral Parliamentary Democracy
President: László Sólyom
Prime Minister: Gordon Bajnai 
Foreign Minister: Péter Balázs
Membership of international groupings/organisations: Australia Group, BIS, Group (AG), British Association for Central and Eastern Europe (BACEE), CEE, Central and Eastern Europe Free Trade Association (CEFTA), CE, CEI, CERN, Euro-Atlantic Partnership Council (EAPC), Economic Commission for Europe (ECE), European Union (EU), Food and Agriculture Organisation of the United Nations (FAO), International Bank for Reconstruction and Development (IBRD), International Development Association (IDA), International Energy Agency (IEA), International Finance Corporation (IFC), International Labour Organisation (ILO), International Monetary Fund (IMF), International Maritime Organisation (IMO), Inmarsat, International Organisation for Standardisation (ISO), Interpol, International Olympic Committee (IOC), Non-Aligned Movement (NAM) (guest), North Atlantic Treaty Organisation (NATO), NEA, NSG, OAS (observer), Organisation for Economic Cooperation and Development (OECD), Organisation for Co-operation and Security in Europe (OSCE), Partnership for Peace (PfP), United Nations (UN), Western European Union (WEU) (associate), World Health Organisation (WHO), World Intellectual Property Organisation (WIPO), World Meteorological Organisation (WMO), World Trade Organisation (WTO).

Hungary is a democratic republic. It joined the European Union on 1 May 2004. It became a member of NATO on 12 March 1999.

ECONOMY

Basic Economic Facts

GDP (market exchange rate): US$142.3bn (2007)
GDP (purchasing power parity): US$190.1bn (2007)
Real GDP growth: 0.6% (2008)
GDP per head (market exchange rate): US$14,094 (2007)
GDP per head (purchasing power parity): US$19,114 (2007)
Unemployment: 7.9% (2008)
Inflation: 6.1% (2008)
Current account deficit: 8.4% of GDP (2008)
Budget Deficit: 3.8% (2008) 
Major Industries: Metallurgy, construction materials, processed foods, textiles, chemicals (especially pharmaceuticals), motor vehicles, logistics, business services centres
EU share in foreign trade: 77% (exports); 68% (imports).
Other major trading partners: USA, Russia

Further information about Hungary's economy can be found at UK Trade & Investment Country Profile: Hungary.

HISTORY

Hungarians are deeply attached to their national, cultural and linguistic heritage. Migration rates, within Hungary as well as overseas, are low.

Longer Historical Perspective

The ancestors of ethnic Hungarians were the Magyar tribes, who moved into the Carpathian Basin in 896, conquering the people already in the region. Hungary became a Christian Kingdom under St Stephen in the year 1000. Much of Hungary fell under Turkish domination from the early 16th until the late 17th century. Thereafter, the country came under Habsburg rule. This lasted until 1918 – although from the establishment of the dual Austrian-Hungarian monarchy in 1867 onwards, Hungary enjoyed broad autonomy and a golden period.

Recent History

Hungary was on the losing side of both World Wars. At the end of the first, Hungary lost two-thirds of its territory under the 1920 Treaty of Trianon, leaving large numbers of ethnic Hungarians in Romania (c. 1.5 million), Slovakia (c. 550,000), Serbia and Montenegro (c. 350,000) and the Ukraine (c. 150,000). After the Second World War, the Communists gained complete control by 1948, despite the low level of support for Communism in Hungary. Stalin's death and Khrushchev's denunciation of him brought about a crisis in Hungary and led to the 1956 Uprising, which was suppressed by Soviet troops. After an initial period of oppression, from 1961 the new Communist leader, Kadar, instituted a platform of national reconciliation and then in 1968 introduced new radical economic reforms unparalleled in any other communist country. These led to a gradual improvement in living standards, a relaxation of the domestic atmosphere and improved relations with the West. But there was no parallel relaxation of the Communist grip on political life.

Post-1989

Hungary played a key role in the fall of Communism in 1989 by opening its borders allowing East Germans to enter Austria. Since then it's transition to parliamentary democracy has run smoothly. The first democratic elections after the collapse of communism were held in March/April 1990. Subsequent elections were held in 1994, 1998 and 2002, with centre-right and centre-left coalitions being elected in succession, each serving a full 4-year term.

After the change of regime Hungary quickly embarked on a programme to institute a free market economy. Privatisation got underway more quickly than in many transition countries. There was, however, a macro-economic downside. In March 1995 the then-Socialist government was forced to implement an austerity package (the Bokros package) to address structural problems. This was in reaction to a huge rise in the trade/government deficit and a surge in inflation.

During the late 1990s, the Hungarian economy reaped the benefits of those measures. As a result of the global economic crisis, Hungary's economy has turned into a recession. This year a negative growth of 5-6% is expected. Unemployment is projected to increase from the current 7.8% to 9% this year, and inflation is projected to decrease from 6.3% to 3-4% in 2009. Nearly 90% of GDP is now generated by the private sector compared with just 10% in 1990. Hungary is concentrating on structural investment, and has a higher skills-base than most of its neighbours. Exports have steadily risen since 1993; over 75% of trade is now with the European Union 

However much needed structural reforms have not been tackled  Attempts by the government to reform the health service were dropped after a referendum in March 2008 showed strong public opposition to paying for health services.  Tax rates and tax avoidance are high.  Hungary's economy is small, open, and therefore vulnerable to the impacts of the global financial and economic crisis. The government secured an IMF loan in November 2008 to prevent speculators making a run on the forint.

BBC News Country Timeline: Hungary

INTERNATIONAL RELATIONS

Relations with the UK

Hungary is a member of the Council of Europe, OSCE, OECD, NATO and (since 2004) the European Union.  Along with Poland, Slovakia and the Czech Republic she is also a member of the so-called Visegrad-4 Group (V4).   Hungary plays an active role in overseas peace-keeping and security operations, primarily in the Balkans but also in Afghanistan, where they have troops and a PRT, and Iraq.  Hungary has a strong interest in the social and cultural well-being of ethnic Hungarians in neighbouring countries (i.e. in territory that was part of Hungary before the country was reduced in size by roughly two-thirds at the Treaty of Trianon, 1920).  

There is a healthy trade and investment relationship and British tourists frequently visit.  Hungarians work and study in UK, but not in anything like the numbers of other Central European countries; Hungary has a low migration rate, Hungarians tend to stay at home.   UK and Hungary governments discuss a wide range of issues - from EU Justice and Home Affairs policy, agriculture, climate change and energy, to foreign policy issues such as EU enlargement, Russia and developments in the Balkans.   On some issues there is common ground but on others, Hungarian and British interests and positions diverge (e.g CAP, WTD, data protection, EU integration) and lobbying can be difficult.

Relations between the UK and Hungary at official level are friendly, but there have been few high-level visits recently from the UK, in comparison to some other EU MSs.  The UK is not naturally one of Hungary's first partners of choice; these are neighbours Germany and Austria, and, increasingly, France (Sarkozy has visited several times)

Recent Visits

Inward

• Ferenc Gyurcsány, Prime Minister, June 2006
• Ferenc Gyurcsány, Prime Minister, April 2007
• Janos Koka - Minister of Economy and Transport and Janos Veres,Finance Minister, October 2007
• Kinga Göncz, Foreign Minister, January 2008
• Imre Szabo, Environment Minister, October 2008

Outward

• Lord Mayor, July 2006
• Dennis MacShane MP, October 2006
• Geoff Hoon, Minister for Europe, March 2007
• Meg Hillyer,  May 2008
• Jim Murphy, Minister for Europe, September 2008
• HRH The Queen visited Hungary in May 1993 and HRH The Prince of Wales last visited in April 2000

GEOGRAPHY

Hungary is a landlocked state in Central Europe, bordering Austria, Croatia, Romania, Serbia and Montenegro, Slovakia, Slovenia and Ukraine. It is mostly flat, with low mountains in the north and north-east and to the north-west of Lake Balaton (Western Hungary). Hungary has some limited natural resources (bauxite, coal, and natural gas), as well as fertile soils and arable land.

TRADE AND INVESTMENT

Trade and Investment with the UK

In 2007 combined trade amounted to over GBP 3.19 billion (GBP 2.88 billion in 2006). These figures reflect a growth of UK exports to Hungary, although a much higher growth rate was recorded in the size of Hungarian exports to the UK - which stood at GBP 2.341 billion. Total direct investment by British companies since 1990 has been approximately £3.5 billion. There is a thriving British Chamber of Commerce with some 200 members.

POLITICS

Recent Political Developments

The President, László Sólyom, was elected by parliament in June 2005 and inaugurated on 5 August 2005. President Sólyom is a constitutional lawyer and three times President of the Hungarian Constitutional Court. Under the constitution, the President has relatively little executive power, but does provide a check on the constitutionality of government legislation.

A Socialist-Free Democrat coalition government was formed after the April 2006 general elections, but frustrated at its failure to implement promised reform (particularly after its heavy defeat in March in a referendum on health charges), the Free Democrats left the coalition in April 2008, saying they would only support the government on a case by case basis. Prime Minister Bajnai (who belongs to no party) is governing with support from the Socialist Party and the Liberal SzDSz Party. The government's main pledge is to continue to reduce the budget deficit in line with a Convergence Program approved by the European Union and to pursue structural austerity in line with the IMF stand-by facility agreed in autumn 2008. 

Prime Minister: Gordon Bajnai
Minister of Finance: Péter Oszkó
Minister of Economy and National Development: Istvan Varga
Minister of Foreign Affairs: Péter Balázs
Minister of Local Authority:  Zoltán Varga
Minister of Transport, Commuication and Energy: Péter Hónig
Minister of Social and Labour Affairs: László Herczog
Minister of Defence: Imre Szekeres
Minister of Health: Tamás Székely
Minister of Environment Protection and Water Management: Imre Szabó
Minister of Education and Culture: István Hiller
Minister of Justice and Law Enforcement: Tibor Draskovics
Minister of Agriculture and Regional Devleopment: József Gráf
Minister in charge of the PMO: Csaba Molnár
Minister without portfolio responsible for social policy co-ordination: Péter Kiss
Minister without portfolio in charge of the secret services: Gábor Juhász

 

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Travel Advice

Travel advice: Hungary

See Also

Useful Links

• UK Trade & Investment Country Profile: Hungary
• British Chamber of Commerce in Hungary
• British Council in Budapest
• Office of the Prime Minister of Hungary
• BBC News Country Timeline: Hungary  

Contacts

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