Economy of Hungary

By | April 29, 2022

According to cheeroutdoor, Hungary is a moderately developed industrial-agrarian state actively participating in international trade. GDP – 62.5 billion dollars, GDP per capita – 6.2 thousand dollars (2002). With a share of national production in world GDP of 0.15%, the share of the country’s foreign trade in world trade is 0.47% (2000). The inflation rate has been consistently declining from 28.2% in 1995 to 5.3% in 2002.

The structure of GDP (2001): agriculture and forestry – 4.3%, industry and construction – 32.0%, trade and personal services – 12.8%, transport and communications – 9.1%, financial activities – 21, 7%. The most noticeable changes in the structure of Hungary’s GDP in the 1990s. there was a reduction in the share of the agricultural sector and an increase in the share of services.

The share of the private sector in GDP is more than 80% (10% in 1990). Privatization peaked in 1995, and by 1999 this process was largely completed. In 2002, there were 190 enterprises (mostly unprofitable) in state ownership. The government of P. Medjesha intends to leave approx. 40 enterprises (mainly forestries and transport companies “Volan”).

The share of foreigners in the ownership structure of the Hungarian economy has reached 30%. Of the 200 largest Hungarian enterprises, approx. 160 are partially or wholly foreign-owned, every tenth enterprise in Hungary has a foreign partner, co-founder or owner. Foreign capital controls 90% of the communications and long-distance communications industry, 70% of the banking and financial sector, and 60% of the country’s energy sector. 2/3 of the products of the Hungarian manufacturing industry come from foreign-owned enterprises.

The employment rate is 56.3%, or 3.9 million people. (2002). The average annual number of unemployed is 239 thousand people. Lasted from Ser. 1999 the process of reducing unemployment in con. 2002 changed the trend and amounted to 5.8%.

In industry, the manufacturing industries are the most developed (providing 90.6% of gross industrial output), including automobile, machine tool and instrument making (42.6%), food industry (15.0%), petrochemistry (13.8%). %). After the decline of the con. 1990s production is stabilizing in metallurgy and light industry, which works almost exclusively on raw materials supplied by the customer. The share of energy and water supply is 8.9%. In the extractive industries, production is gradually curtailed.

Two-thirds of all industrial products are produced at large enterprises (more than 300 people employed), and the process of concentration of production continues, especially in mechanical engineering, energy, and petrochemistry.

Hungarian industry is quite dependent on the state of the world market: more than half (52%) of all industrial production is exported. Large enterprises export – depending on the industry – 60-80% of their products. The needs of the domestic market are satisfied mainly by small and medium-sized enterprises (the number of employees, respectively, is up to 50 and up to 300 people).

Agriculture is experiencing problems with the beginning of the processes of socio-political transformation. The main reasons include the hasty liquidation of agricultural cooperatives, omissions in the implementation of land policy, insufficient funding for the industry, as well as droughts for a number of years. This led to a reduction in the share of agricultural products (excluding the food industry) in GDP (in 1993–2002 from 17.7 to 4.3%), the share of agricultural products in exports, the number of employees, the size of agricultural land, livestock, etc.. The agrarian policy of the government is aimed at strengthening the role of agriculture in the economy, especially in traditional sectors for Hungary: the production of corn, wheat, meat, vegetables, fruits, wine.

Agricultural land is 6.1 million hectares, of which more than 50% is arable land. 1.5 million hectares are occupied by spike crops, 1.0 million hectares are occupied by corn.

Crop production is represented mainly by grain farming, as well as vegetable growing and horticulture (including viticulture). Livestock provides more than 60% of domestic agricultural income. The most developed are pig breeding, breeding of cattle for meat and dairy purposes, and poultry farming. The needs of the domestic market are also satisfied by sheep breeding and fish breeding in artificial reservoirs.

Hungary has a well-developed network of transport communications. The length of public roads is more than 30 thousand km, 90% of them have a hard surface. Railways – 7.9 thousand km. The length of inland waterways is 1.6 thousand km. The main river port is Budapest. Domestic air transportation is not carried out, there is a network of small airfields for receiving small aircraft. Ferihegy International Airport is located near Budapest.

Convenient transport location enhances the transit role of the country. Oil pipelines Druzhba-I (from Ukraine), Druzhba-II (from Slovakia) and Adria (from Croatia), gas pipelines Bratstvo (from Ukraine) and Baumgartner-Gyor (from Austria) pass through the territory of Hungary ); the total length of pipelines is 7.2 thousand km. The construction of high-speed highways is being actively carried out within the framework of the so-called. Helsinki transport corridors: in 2002 already 60% of the Hungarian sections of the “corridors” met the established European requirements.

The total freight turnover is 26.9 billion tkm (2002). Structure by types of transport: road – 51%, rail – 30%, pipeline – 15%, water – 3%. Structure by directions of transportation: international – 60%, domestic – 40%. Water and air transport are practically not used in domestic cargo transportation. Passenger traffic on intercity transportation is 785 million people, on intracity transportation – 2.8 billion people. (2002).

The development of telecommunications in Hungary is dynamic: with a relatively modest growth in traditional telephony, mobile communications are developing at an accelerated pace. The number of mobile phone subscribers in 2000-02 increased from 2.5 to 5.5 million people. The volume of radio broadcasting reached 800 thousand hours, television broadcasts – 1.8 million hours. Hungarian television broadcasts on three state channels. In addition, there are three private channels and many commercial cable networks. Broadcasting is carried out by three state stations and a number of commercial ones. Control over the political content of state electronic media programs is carried out by boards of trustees, to which the government and the opposition delegate their representatives on an equal footing.

After the recession of 1987–97, retail trade turnover has been constantly expanding (in 2002, $24.8 million). This is facilitated by the growth of monetary incomes of the population, the emergence of new types of trade (hypermarkets, shopping centers) and improving the quality of service. Trade turnover structure (2002): 33.4% – foodstuffs, 28.4% – vehicles, spare parts and fuel for them, 16.4% – furniture and household appliances, 9.5% – cultural and educational goods.

The tourism industry is one of the fastest growing sectors of the Hungarian economy. It employs 300 thousand people. (7% of the economically active population) and creates almost 10% of the country’s GDP. The developed tourist infrastructure (hotels, catering points, beach, health and entertainment complexes, swimming pools, hunting lodges, fishing spots, etc.) is aimed at visitors with different incomes. Hungary annually receives 10-15 million foreign tourists. Foreign exchange earnings from tourism amount to 3.4 billion dollars (2002).

Since 1987, a two-tier banking system has been operating in Hungary: the Hungarian National Bank (VNB) carries out the emission and credit policy, general control over the financial market, and authorized financial institutions lend directly to economic entities.

In 1991–94, the government’s program of banking consolidation was implemented, aimed at improving the crisis state of most banks and increasing their assets, and improving the loan portfolio. Since 1995, the sale of blocks of shares in consolidated banks to reputable Western financial institutions began. By 1998, the privatization of Hungarian banks was practically over. The level of presence of foreign capital in the banking system is 63%.

At the beginning 2000, the Hungarian system of credit institutions consisted of 43 banks (90.3% of all financial and credit transactions), 226 savings cooperatives (5.6%), 9 specialized financial institutions (3.6%) and 4 housing savings banks (0. 5%).

The degree of concentration of banks in Hungary is quite high: the top six banks together own almost 60% of the assets of the banking system.

The public finance system structurally consists of four subsystems: the central government (central level), local governments (local level), separate state funds, and social insurance bodies.

Between 1998 and 2001, the overall level of the central government budget deficit fell consistently from 4.8% to 3.3% of GDP. In 2002, there was a sharp surge – up to 9.6% of GDP, caused by a change in government and a massive increase in social benefits. A target of 4.5% of GDP is planned for 2003 in order to reach the level of the Maastricht criteria for EU membership (3% of GDP) in 2004.

In 2002, the revenue side of the budget amounted to 17.8 billion dollars, of which approx. 80% – receipts of a tax nature (taxes, excises, duties). Measures to stimulate entrepreneurship and improve the efficiency of the private sector led to a reduction in the degree of centralization of budget revenues: the share of state budget revenues in GDP in 1994-2002 decreased from 52.5 to 27%.

The main place in tax revenues to the budget is occupied by the general turnover tax (analogous to Russian VAT), whose share is 39%, income tax (24% of revenues), consumer tax and excises (19%), business profit tax (called corporate tax) – ten%.

In Hungary, the treasury system of budget execution is used, i.e. all funds necessary for state institutions are received and spent from the so-called. single treasury account. The Hungarian State Treasury is responsible for the technical work of financing the central budget.

The institutional divisions of the Hungarian financial system are also the State Supervision of Financial Organizations (monitoring the compliance with the law by participants in the stock and currency markets), a set of banking and financial institutions, various organizations providing services for the non-state management of financial markets (stock and commodity exchanges, the central clearing center, brokerage and dealer firms, etc.), insurance companies and pension funds.

Hungary’s public debt in 2002 was 9.2 trillion fora. (37.5 billion dollars), or 52.2% of GDP. All functions related to the management of public debt (including the currency and forint components) are performed by a specially created Center for Public Debt Management (PDMS). The CDGD was tasked with a gradual transition from the practice of attracting foreign loans to finance external debt obligations to the issuance of government bonds denominated in the national currency – forints. In 2002 Hungary’s gross external debt of the central government (ie excluding private sector borrowing) fell from 27.8 billion euros to 24.8 billion euros.

Hungary stands out for the comparative smoothness of social contrasts, although property stratification is growing. The minimum wage is $200, the minimum pension is $82 (2002). The policy of large-scale wage increases for state employees and the strengthening of the forint in 2001–02 raised the average wage in the country to $500 (the average nominal wage in sectors of the economy ranges from $345 in agriculture to $1,000 in the financial sector).

The growth of real incomes in 2002 was 13.6%. As a result, trade turnover increased (by 11%), investments in various forms of accumulation (forint bank deposits (by 13%), life insurance (by 20%), contributions to non-state pension funds (by 27%), etc.). ). Government policy to stimulate housing construction has contributed to an increase in investment in real estate.

Economy of Hungary