Hungary: country overview19 June 2012
by Ina Dimireva -- last modified 03 March 2014
Hungary fell under communist rule following World War II. In 1956, a revolt and an announced withdrawal from the Warsaw Pact were met with a massive military intervention by Moscow. Under the leadership of Janos KADAR in 1968, Hungary began liberalizing its economy, introducing so-called "Goulash Communism." Hungary held its first multiparty elections in 1990 and initiated a free market economy. It joined NATO in 1999 and the EU five years later.
Year of EU entry: 2004
Member of Schengen area:Yes
Political system: Republic
Capital city: Budapest
Total area: 93 000 km²
Population: 10 million
Currency: forint (Ft)
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-28 average. 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 a severe economic contraction 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. 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 Budapest's rejection of EU and IMF economic policy recommendations led to a breakdown in talks with the lenders in late 2012. Global demand for high yield has since helped Hungary to obtain funds on international markets. Hungary’s progress reducing its deficit to under 3% of GDP led the European Commission in 2013 to permit Hungary for the first time since joining the EU in 2004 to exit the Excessive Deficit Procedure.
Source: Your Europe