Hungary: country overview19 June 2012
by Ina Dimireva -- last modified 30 January 2017
Under the leadership of Janos KADAR in 1968, Hungary began liberalizing its economy, introducing so-called "Goulash Communism." Hungary held its first multi-party elections in 1990 and initiated a free market economy. It joined NATO in 1999 and the EU five years later. The most important sectors of Hungary’s economy in 2015 were industry (27.4 %), wholesale and retail trade, transport, accommodation and food services (18.3 %) and public administration, defence, education, human health and social work activities (17.6 %). Hungary’s main export partners are Germany, Romania and Slovakia, while its main import partners are Germany, China and Austria.
Geographical size: 93 011 km2
Population: 9 855 571 (2015)
Population as % of total EU: 1.9 % (2015)
Gross domestic product (GDP): € 108.748 billion (2015)
Official EU language(s): Hungarian
Political system: parliamentary republic
EU member country since: 1 May 2004
Seats in the European Parliament: 21
Currency: Hungarian Forint HUF
Schengen area member? Yes, Schengen Area member since 21 December 2007.
Presidency of the Council: Hungary has held the revolving presidency of the Council of the EU once in 2011.
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 investment, 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 bailout program lapsed at the end of 2010 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 a 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. The government remains committed to keeping the budget deficit in check and lowering public debt by using sectoral taxes, while relying on state interventionist measures to lower utility prices and boost growth and employment.
Source: Your Europe, Europena Commission, CIA World Factbook