Hungary’s strong manufacturing sector and recent capacity expansion has turned it into a competitive exporter. As a member of the EU, Hungary benefits from relatively well developed institutions. Nevertheless, increasingly populist government policy has weighed on the business environment, while the country’s domestic demand recovery will trail that of its Central European peers due to a crippled banking sector and soft external demand.

We keep our clients informed of the latest market moves and political developments as part of our 'top-down' and 'bottom-up' perspective. Clients also benefit from in-depth analysis on 19 of Hungary’s most important industries. We provide interactive data and forecasting alongside detailed and risk-assessed analysis from our expert teams. We aim to keep you ahead of the curve, so you can do business with ease in Hungary.

Country Risk

Hungary Country Risk

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Core Views

  • Having been propped up by fiscal stimulus and EU transfers, real GDP growth in Hungary will remain at relatively subdued levels in the coming quarters as government spending is scaled back. Hungary's domestic demand recovery will continue, but trail that of Central European peers due in part to a crippled banking sector. However, we see steady economic growth ahead, driven by accelerating external demand, improving terms of trade and a better outlook for private consumption.

  • Although public debt remains well above Emerging European averages and is forecast to decline slowly in the coming years, Hungary's sovereign profile has improved in recent years following substantial external deleveraging.

  • Hungary's current account surplus will remain sizeable in the coming years, bolstered by falling oil prices. We...

Hungary Operational Risk Coverage (9)

Hungary Operational Risk

BMI View:

BMI View: Businesses considering entering Hungary will benefit from strong legal frameworks that support and protect international companies, as well as minimal trade barriers, a sophisticated financial sector and efficient online bureaucracy. The key downside risks include an uncompetitive tax regime which is discriminatory in some cases, tight controls on foreign currency loans and high national indebtedness. The government has however signalled that it would lower taxes and Hungary remains a low risk investment choice, with net capital inflows through direct and portfolio investment channels.

Open trade and investment policies have been a key driver of economic growth in Hungary over the last 20 years, stimulating high levels of foreign direct investment (FDI) and large volumes of international trade. In particular, the development of a sophisticated manufacturing industry has resulted in...

Hungary Crime & Security

BMI View:

BMI View: Hungary is a relatively stable country with low levels of crime and security risk, offering an attractive environment for investors. While threats from state or terrorist actors are low, some criminal involvement in the formal economy and occasional political unrest have the potential to disrupt business operations.

Hungary is a very stable nation from a geopolitical perspective. The risk of interstate conflict is very low, mitigated by high levels of international cooperation. The terror threat is also low, as there are no international groups known to be operating in the country. Criminal risk presents the greatest security threat. Crimes against individuals are no worse than in other European countries, although we see increasing influence from criminal groups in the formal economy. This serves to lower Hungary's overall performance slightly, scoring 70.6 out of 100 in...

Hungary Labour Market

BMI View:

BMI View: Hungary's high quality education system and improving public health services has resulted in the availability of a skilled and productive labour force, which foreign investors benefit from. Nevertheless, businesses face costs associated with high labour taxes, a small migrant worker population and relatively high minimum wages. Taking these factors into consideration, BMI has given Hungary a score of 54.9 on the Labour Risk Index, placing it 20th out of 31 countries in Emerging Europe and 85 thout of 201 states globally.

Hungary's well developed education system is one of the country's key strengths, making its labour force attractive for foreign businesses operating in the country. Public education is free for children until the age...

Hungary Logistics

BMI View:

BMI View: Hungary benefits from well-developed logistics, with a developed transport system enabling strong trade links with regional neighbours. However, the country is landlocked and therefore lacks shipping and air lines, making it less attractive for foreign businesses. Hungary's extensive trade bureaucracy, overreliance on power and fuel imports and high utilities costs pose further risks to investors. The country therefore scores 61.1 out of 100 for Logistics Risks, placing the country among the top 10 out of 31 countries regionally and in 49th position out of 201 countries in the world.

Hungary's improving economic growth outlook is partly driven by lower fuel prices, which were previously highly uncompetitive. However, electricity costs remain very high and the absence of domestic extractive resources has resulted in energy and fuel dependency on Russia, increasing risks...

Hungary Trade & Investment

BMI View:

BMI View: Businesses considering entering Hungary will benefit from strong legal frameworks that support and protect international companies, as well as minimal trade barriers, a sophisticated financial sector, and efficient online bureaucracy. The key downside risks include an uncompetitive tax regime which is discriminatory in some cases, tight controls on foreign currency loans, and high national indebtedness. The government has however signalled that it would lower taxes and Hungary remains a low risk investment choice, with net capital inflows through direct and portfolio investment channels.

Open trade and investment policies have been a key driver of economic growth in Hungary over the last 20 years, stimulating high levels of foreign direct investment (FDI) and large volumes of international trade. In particular, the development of a sophisticated manufacturing industry has resulted in...

Hungary Industry Coverage (19)


Hungary Autos

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Key Views

  • Commercial vehicle sales have been outperforming those of passenger cars over 2015 against a slowing macroeconomic backdrop.

  • Hungarian auto production remains dominated by three manufacturers, Magyar Suzuki, Daimler and Audi Hungaria.

  • One potential near-term headwind facing the local production sector comes from the ongoing emissions scandal engulfing automaker Volkswagen. Around 2mn out of the 11mn diesel engines affected by the scandal were reportedly produced at Audi Hungaria.

  • On the sales side, it also remains to be seen what effect the ongoing emissions scandal facing Volkswagen will have on the sales of its VW, Audi, Seat and...

Commercial Banking

Hungary Commercial Banking

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Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

Consumer Electronics

Hungary Consumer Electronics

BMI View:

BMI View: The medium-term outlook for Hungarian consumer electronics device spending is a marked improvement over 2015 and 2016. We forecast a CAGR of 5.7% over 2016-2020 to total device spending of USD2.3bn in 2020, boosted by forint appreciation forecast by our Country Risk team from 2017 that will increase purchasing power, as well as unlock deferred purchases from 2015 and 2016. The AV and PC markets were most severely impacted by depreciation in 2015 and 2016, and it is in these segments that we envisage the most significant improvement over the medium term. While we expect improvement, there is still downside, with Hungary's economy...

Defence & Security

Hungary Defence & Security

BMI View:

BMI View: Hungary acknowledges that its geographical position in Central Europe, bordering the Ukraine as well as the Balkans, presents some threats, as well as opportunities. Stability in Central and Eastern Europe and South East Europe, remains the top priority for Hungarian foreign and security policy.

Similar to other Eastern European countries, Hungary has had to deal with a significant transformation of its defence industry as a result of its post-Cold War democratic transition. Some companies such as Danubian Aircraft have been successful in this transformation. It has managed not only to recover from bankruptcy of its parent company PVG but also to participate in the operation of upgrading 14 Gripen and other aircraft for the Hungarian Air Force.

The armed forces suffer from budgetary constraints. Nevertheless, the...

Food & Drink

Hungary Food & Drink

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Latest Updates

  • Total food consumption value (local currency) growth y-o-y in 2015: +4.7%; compound annual growth rate (CAGR) 2019: +4.7%.

  • Per capita food consumption value (local currency) growth y-o-y in 2015: +4.9%; CAGR to 2019: +4.9%.

  • Alcoholic drinks value (local currency) sales growth y-o-y in 2015: -0.3%; CAGR to 2019: +2.7%.

  • Soft drinks value (local currency) sales growth y-o-y in 2015: +0.1%; CAGR to 2019: +3.4%.

  • Total mass grocery retail value sales (local currency) growth y-o-y in 2015: +3.3%; CAGR to 2019: +5.2%.

Structural Trends

Policy on Mass Grocery Retailers (MGR) poses a threat to profitability. Hungary has imposed a ban on large retailers that prohibits operating on...

Freight Transport

Hungary Freight Transport

BMI View:

BMI View: The year 2016 will see mixed results for Hungary's freight sector, with rail freight growing by a strong 4.3% and road and air freight seeing more moderate growth of 2.15% and 2.33% respectively. The good performance of rail freight will come on the back of the eurozone recovery, which will boost demand for Hungary's vehicles exports. Road and air freight will profit from improved domestic consumption which will drive imports of consumer goods, transported by these means. Over the medium term we forecast these trends to continue which, supported by investment into rail infrastructure, will increase the importance of rail in the freight mix....

Information Technology

Hungary Information Technology

BMI View:

BMI View: We downgraded our estimate for IT market growth in 2015 to reflect the extent of forint depreciation, and although conditions will ease in 2016 the forint and weak confidence levels will continue to be challenging for vendors. The medium term-outlook is considerably stronger stronger, however, and we expect a faster growth trajectory from 2017 across all three market segments. Forint depreciation and household income growth has the potential to ease price sensitivity in the retail hardware market, while enterprise modernisation and rationalisation will drive faster growth for software and services spending. We forecast IT spending will increase at a CAGR of 5.6% 2016-2020 to HUF679.1bn. Risks are weighted to the downside, and global economic headwinds or...


Hungary Infrastructure

BMI View:

BMI View : We expect slower growth in Hungary's construction sector from 2016 onwards as the government's stimulus for the infrastructure sector comes to an end. EU funding will continue to support the sector - particularly strategic road and rail projects, although we caution the EU probe into cartel allegations in road construction could damage relations with a key financier in the European Commission (EC).

Strong growth in Hungary's construction sector is not expected to be long term as we expect a rising fiscal deficit to necessitate a drawback in public investment. Between 2016 and 2024, we expect construction sector real growth to average 3% per year.



Hungary Insurance

BMI View:

BMI View: The outlook for Hungary's insurance market is highly positive. Rising levels of household income and solid demographic trends are boosting demand for various life products, leading to gains in penetration and density rates over the five year forecast period. Strong demand for some of the smaller non-life lines, such as health and personal accident insurance, will also support growth in the non-life sector.

Headline Insurance Forecasts (Hungary 2013-2020)
Indicator 2013 2014 ...

Medical Devices

Hungary Medical Devices

BMI View:

BMI View: We expect the Hungarian medical device market to grow by a CAGR of 4.5% in US dollar terms over the 2014-2019 period, boosted by a strengthening economy. Hungary will remain heavily reliant on imported medical devices despite a growing domestic industry. Manufacturers tend to concentrate on exports, most of which are shipped to Western Europe. ...

Oil & Gas

Hungary Oil & Gas

BMI View:

BMI View : Despite an efficient refining sector and favourable regulatory environment Hungary's weak upstream profile renders the country one of the least attractive oil and gas markets in Central and Eastern Europe. Small and depleting reserves will push Hungary's oil and gas production lower over the coming decade thus making the country increasingly dependent on energy imports from Russia.

Headline Forecasts (Hungary 2013-2019)
2013 2014e


Hungary Petrochemicals

BMI View:

There is a modest upside to the performance of the Hungarian petrochemicals sector in 2016 with the addition of new butadiene capacity and supportive economic environment, although growth will moderate. The strength of the automotive sector should boost consumption levels in 2016 and beyond.

Growth in rubber and plastic output was strong in the first five months of 2015 at 9.8%, compared to 1.7% decline in industry. While output has been on an upwards trend since mid-2014, in Q215 it showed signs of a slowdown, in line with the performance of the overall economy. Polyethylene (PE) output rose by 10% y-o-y to 272,000 tonnes in H115 with growth largely concentrated in the first quarter with growth slackening considerably in the following quarter. In contrast, polypropylene (PP) experienced a sustained surge with 23.5% y-o-y growth to 268,000 tonnes in H115. Petrochemicals output should be supported by a new butadiene capacity that is due to...

Pharmaceuticals & Healthcare

Hungary Pharmaceuticals & Healthcare

BMI View:

BMI View: Hungary's pharmaceutical market represents a moderate but reliable commercial prospect within Central and Eastern Europe. The government plays a key role in the provision of medical services as demonstrated by its recent ban on parallel exports of medicines and the decentralisation of primary care. We nevertheless expect the private sector to become more involved over the medium term.

Headline Expenditure Projections

  • Pharmaceuticals: HUF648.10bn (USD2.79bn) in 2014 to HUF660.80bn (USD2.36bn) in 2015; +2.0% in local currency terms and -15.3% in US dollar terms.

  • Healthcare: HUF2.38trn (USD10.22bn) in 2014 to HUF2.42trn (USD8.65bn) in 2015; +1.9% in local currency terms and -15.3% in US dollar...


Hungary Power

BMI View:

BMI View: Hungary's domestic power sector is relatively well developed, with an extensive transmission grid and a broad mix of energy sources. Future investment is very much concentrated on expansion of nuclear power, with renewables struggling to gain any significant investor interest in light of limited subsidies and lack of government support. With new nuclear capacity not expected to come online within the forecast period, we are maintaining our forecasts for minimal growth in total electricity generation and capacity mean that as consumption increases Hungary will be increasingly reliant upon energy imports to maintain supply.

Headline Power Forecasts (Hungary 2014-2020)
2014e ...

Real Estate

Hungary Real Estate

BMI View:

BMI View: A positive economic outlook will support the real estate sector in Hungary over the medium term. Demand for high quality space should remain high, particularly in the office and industrial sectors. New construction activity remains limited, with the majority of space under construction already pre-let. Consequently, we expect rental growth at the prime end of the market in these two sectors. Retail rents, on the other hand, are likely to remain stable due to the newly introduced legislative changes, which could constrain retailer demand despite rising consumer confidence and spending.

Hungary's economic growth is expected to remain steady over the medium term. GDP growth is forecast to be 2.8% this year and to average...


Hungary Retail

BMI View:

BMI View: Sustained economic growth, rising employment levels and gradually increasing wages will support considerable expansion in household incomes and spending in 2016. Consumer confidence levels in Hungary remain high, while favourable crediting conditions are expected to support stronger spending growth over the coming quarters.

Headline Household Spending
e/f = BMI estimate/forecast. Source: Eurostat, BMI

Key Views & Developments

  • ...


Hungary Telecommunications

BMI View:

BMI View: Two new mobile network operators plan to launch in the near future, but with Vodafone mulling a withdrawal and multiplay operator UPC recording only tepid interest in its MVNO services, prospects are not good for new infrastructure-led players. Mobile data usage is trending upwards but has yet to generate the kind of revenues needed to offset declining voice and messaging revenues. However, triple-play uptake at Telekom, Invitel and UPC highlight the potential posed by convergence.

Product Innovation Driven By Market Saturation
Hungary Mobile Market Forecasts


Hungary Tourism

BMI View:

BMI View: We expect Hungary's tourism market to continue its healthy growth as the number of tourist arrivals in the country will steadily increase in the forecast period. Initial concerns about the decrease in the number of Russian tourists have been discarded as the Asia Pacific and the North American market started bringing in more tourists, a trend that is set to continue in the next five years. This will contribute to increasing the value of international travel receipts. However, Hungary has yet to realise the full potential of the Asia Pacific market, which could bring significant revenues but is being held back due to the complex process for obtaining visas.

Key Forecasts (Hungary 2014-2020)


Hungary Water

BMI View:

BMI VIew: Hungary has considerable issues with regards to its water industry, as its drinking water supply and infrastructure struggle to meet EU standards. The country's water sector is beginning to see significant investment from its own government and the EU, as part of the New Hungary Development Plan, and there is a healthy project pipeline. Meanwhile, a declining population is placing little strain on the existing infrastructure, and the streamlining of processes is guiding our forecast for a decline in extraction and consumption over our five-year forecast period to 2018.

We view the country's water and wastewater utilities sector as one of the more attractive and open in the region, offering greater opportunities than many of its European peers. This is due to the large private sector presence, and the varying ownership...

Latest Hungary Articles

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  • We believe that there is currently disconnect between oil prices and fundam...

Latest Hungary Blogs

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