Hungary: country overview19 June 2012
by Ina Dimireva -- last modified 12 February 2013
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.
Year of EU entry: 2004
Member of Schengen area:Yes
Political system: Republic
Capital city: Budapest
Total area: 93 000 km²
Population: 10 million
Listen to the official EU language: Hungarian
Hungary is a landlocked state with many neighbours – Slovakia, Ukraine, Romania, Serbia, Croatia, Slovenia and Austria. It is mostly flat, with low mountains in the north. Lake Balaton, a popular tourist centre, is the largest lake in central Europe.
The ancestors of ethnic Hungarians were the Magyar tribes, who moved into the Carpathian Basin in 896. Hungary became a Christian kingdom under St Stephen in the year 1000. The Hungarian language is unlike any of the country’s neighbouring languages and is only distantly related to Finnish and Estonian.
The capital city, Budapest, was originally was two separate cities: Buda and Pest. It straddles the River Danube, is rich in history and culture and famed for its curative springs. Hungary has a single-chamber parliament or national assembly whose 386 members are elected by voters every four years.
Hungary has some limited natural resources (bauxite, coal, and natural gas), as well as fertile soils and arable land. Hungarian wines are enjoyed throughout Europe. The country‘s main manufactured exports include electric and electronic equipment, machinery, foodstuffs and chemicals.
Hungary is a highly musical country whose traditional folk music inspired such great national composers as Liszt, Bartók and Kodály. Other famous Hungarians include Albert Szent-Györgyi, who discovered the existence of Vitamin C, writer and Nobel Prizewinner Imre Kertész and Oscar-winning film director István Szabó.
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-27 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 worth more than $70 billion. In late 2008, Hungary's impending inability to service its short-term debt - brought on by the global financial crisis - led Budapest to obtain an IMF/EU/World Bank-arranged financial assistance package worth over $25 billion. The global economic downturn, declining exports, and low domestic consumption and fixed asset accumulation, dampened by government austerity measures, resulted in an economic contraction of 6.8% in 2009. In 2010 the new government implemented a number of changes including cutting business and personal income taxes, but imposed "crisis taxes" on financial institutions, energy and telecom companies, and retailers. The IMF/EU bail-out program lapsed at the end of the year and was replaced by Post Program Monitoring and Article IV Consultations on overall economic and fiscal processes. The economy began to recover in 2010 with a big boost from exports, especially to Germany, and achieved growth of approximately 1.7% in 2011. At the end of 2011 the government turned to the IMF and the EU to obtain financial backstop to support its efforts to refinance foreign currency debt and bond obligations in 2012 and beyond, but Budpest's rejection of EU and IMF economic policy recommendations led to a breakdown in talks with the lenders in late 2012. Since joining the EU in 2004, Hungary has been subject to the European Commisssion's Excessive Deficit Procedure; Brussels has requested that the government outline measures to sustainably reduce the budget deficit to under 3% of GDP. Ongoing economic weakness in Western Europe caused a GDP to fall 1% in 2012. Unemployment remained high, at more than 11%.
Source: Your Europe