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

BMI View:

Core Views

  • Having been propped up by fiscal stimulus in 2013 and 2014, real GDP growth in Hungary will slow in the coming quarters as government spending is scaled back. Hungary's domestic demand recovery will trail that of Central European peers due in part to a crippled banking sector.

  • However, we have revised up our 2015 and 2016 real GDP forecasts on account of 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...

To read the full article Register for Free or Login

Hungary Operational Risk Coverage (9)

Hungary Operational Risk

BMI View:

BMI View: Hungary benefits from a relatively stable economic and political environment, key geographical location with strong trade links across its region, and a highly skilled labour force. As a member of the EU, it enjoys low levels of red tape, facilitating the arrival of foreign businesses. However, its landlocked position prevents the country from becoming a major regional trade hub, despite a strong transport network. Investors also face risks associated with high energy costs, energy insecurity, an uncompetitive tax regime and low labour force participation. Nonetheless, Hungary is an established destination for foreign direct investment (FDI) and receives an overall score of 61.1 out of 100 in BMI's...

To read the full article Register for Free or Login

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...

To read the full article Register for Free or Login

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...

To read the full article Register for Free or Login

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 ten out of 31 countries regionally and in 49 thposition out of 201 countries...

To read the full article Register for Free or Login

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...

To read the full article Register for Free or Login

Hungary Industry Coverage (19)


Hungary Autos

Commercial Banking

Hungary Commercial Banking

BMI View:

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

To read the full article Register for Free or Login

Consumer Electronics

Hungary Consumer Electronics

BMI View:

BMI View: The Hungarian economy has been a regional underperformer in recent years and the outlook is expected to remain weak in 2015 and into 2016 as forint depreciation against the dollar is expected to dampen device demand. This is a shift from the positive trend in 2014 when booming tablet and smartphone sales, as well as the fact upgrade demand was brought forward by the withdrawal of XP support and the FIFA World Cup, drove overall growth. Although several macroeconomic indicators are expected to continue to strengthen in 2015, the depreciation of the forint against the US dollar will mean trading conditions remain challenging and we expect a contraction in both PC...

To read the full article Register for Free or Login

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...

To read the full article Register for Free or Login

Food & Drink

Hungary Food & Drink

BMI View:

BMI View: Although we now expect the Hungarian National Bank (MNB)'s base rate to remain fairly low through to the end of 2015, we see little to indicate that household spending will pick up significantly over the course of the year. While the country's economy will continue its gradual recovery, thereby supporting its food and drink industry, continuing unpredictable policy-making and high corporate tax rates have the potential to impact negatively on investment inflows.

Headline Industry Data

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

To read the full article Register for Free or Login

Freight Transport

Hungary Freight Transport

BMI View:

Czech Republic's freight transport sector will continue growth in 2015 in line with the country's improving economic outlook, following a year in which BMI believes saw increases in volumes across the whole sector.

Total trade is projected to continue picking up in real terms, with our Country Risk desk forecasting a year-on-year (y-o-y) increase of 3.94% in 2015, following an estimated growth of 8.08% in 2014.

Road freight is continues dominating the sector and is projected to grow by 2% in 2015. To the end of our forecast period to 2019, we expect the sector to defy the European Union (EU) pledges of a decrease in road haulage across the region. That is not to say, however, that road freight's market share is completely safe.

BMI notes that rail is the likeliest candidate in Hungary's freight transport mix to benefit...

To read the full article Register for Free or Login

Information Technology

Hungary Information Technology

BMI View:

BMI View: The Hungarian Country Risk team's revised forecast for faster forint depreciation against the US dollar in 2015 resulted in a downgrade to the forecast for IT market growth in the Q3 update. The Hungarian economy has been a regional underperformer in recent years, and the operating environment for IT vendors is expected to remain challenging in 2015 and into 2016. However, IT market spending growth should strengthen as the...

To read the full article Register for Free or Login


Hungary Infrastructure


Hungary Insurance

BMI View:

BMI View: Hungary's insurance market is neither especially large nor growing at a particularly fast rate. While the Hungarian economy is expected to grow at a moderate pace over 2015, concerns surrounding the health of the wider European economy look set to stymie demand for insurance coverage among both business and households. A shrinking population with a low average life expectancy presents a long-term challenge for insurers; however, we see growth opportunities emerging in some markets, including property insurance.

There are some markets in Central and Eastern Europe (CEE) that can look forward to superior growth in premiums - and from a large base - through the forecast period. Hungary is not one of them. The country is a classic example of a fragmented market where excess capacity is...

To read the full article Register for Free or Login

Medical Devices

Hungary Medical Devices

BMI View:

BMI Industry View: We expect the Hungarian medical device market to fall by a CAGR of 0.4% over the 2013-2018 period, although the growth rate in local currency terms is more encouraging at 3.1%. Hungary is 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. The comprehensive public hospital sector and...

To read the full article Register for Free or Login

Oil & Gas

Hungary Oil & Gas

BMI View:

BMI View: Despite an efficient refining sector and favourable regulatory environment, Hungary's weak upstream profile and persisting geopolitical tensions in the region 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 ...

To read the full article Register for Free or Login


Hungary Petrochemicals

BMI View:

BMI View: The Hungarian petrochemicals industry remains an outperformer in Central and Eastern Europe. Steady growth in output was reported for 2014 and we are optimistic that future growth will support continued expansion of capacities over the forecast period (to 2019).

The automotive industry is playing a major part in the country's plastics and rubber growth story with petrochemicals investment largely targeting the automotive supply sector. Production capacity in polyurethane used for car seating and synthetic rubber for tyres have has grown strongly with projects continuing to boost output. Hungary is highly specialised in the production of isocynates, used in the manufacturing...

To read the full article Register for Free or Login

Pharmaceuticals & Healthcare

Hungary Pharmaceuticals & Healthcare

BMI View:

BMI View: Hungary's attractiveness to multinational drugmakers will be impeded by onerous regulatory burden, pricing pressures and punitive taxes on pharmaceutical companies. Combined, these factors will impede growth in pharmaceutical sales over the short-term. Consumer demand for over-the-counter medicines and greater uptake of generic medicines will be the primary drivers of pharmaceutical sales growth, as uptake of innovative drugs will remain hindered by the pricing sensitivity and budgetary constraints of the OEP national healthcare fund.

Headline Expenditure Projections

  • Pharmaceuticals: HUF618.0bn (USD2.66bn) in 2014 to HUF624.09bn (USD2.30bn) in 2015; +1.0% in local currency terms and -13.2% in US dollar...

To read the full article Register for Free or Login


Hungary Power

Real Estate

Hungary Real Estate

BMI View:

BMI View:  A healthier economy has helped provide greater stability for the Hungarian commercial real estate sector during recent months with strong levels of internal and external demand creating a stable footing for demand for rental space and investment. The mood has since begun to sour, however, as economic growth has begun to waver and the central bank has taken measures to support the market.

An acceleration in Hungary's GDP proved the catalyst for the commercial real estate market during 2014 following a prolonged period of stagnation and contraction in rental rate costs across much of the market. The year saw rental rates remain on a stable footing as both internal and external demand trended upwards. Meanwhile, the market saw a substantial increase in investment with transactional activity forecast to have grown by 135% over the full-year on a year-on-year (y-o-y...

To read the full article Register for Free or Login


Hungary Retail

BMI View:

BMI View: The Hungarian retail sector is among the most competitive and dynamic markets in the CEE region. Foreign retailers have a significant presence in the country, however, the government plays a central role in the sector imposing restrictions on large foreign retail chains. New legislation will rebalance the market powers in the growing Hungarian retail sector during 2015-2019.

The country's economy struggled to achieve sustained recovery after the financial crisis. The first positive signs began to show in 2014 and are set to continue through this year. In forint terms, the Hungarian GDP is projected to grow by 2.0% this year as a result of recovering investments and exports. Domestic consumption is also set to contribute to the economic growth as BMI forecasts total household spending to rise at the same rate of 2.0% as net income rises. Prices, on the...

To read the full article Register for Free or Login


Hungary Telecommunications

BMI View:

BMI View: Operators focus on 4G developments as overall market growth is minimal. A partnership for 4G network expansion between mobile market leaders T-Mobile and Telenor offers an opportunity to keep costs low and ensure competitive pricing. As taxation on the industry continues, with no confirmed end in sight, operators face uncertainty that will result in lower investment while the government continues to target the industry. Bundled services are offering the greatest growth potential, enabling operators to tie consumers in for longer.

Key Data

  • Mobile market growth is largely over, with just 1.25% growth in 2014. Although the fastest rate of growth since 2008, only incremental growth is expected over 2015-2019. Operators will focus on upgrading existing subscribers to 4G and postpaid platforms.

  • ...

To read the full article Register for Free or Login


Hungary Tourism

BMI View:

BMI View: We expect to see higher tourism-related receipts and hotel and restaurant industry value over the next five years as well as investment in the tourism sector and physical infrastructure in particular. However, this growth will be highly dependent on the stability of the eurozone and key European source markets, on which Hungary relies for almost 90% of tourist arrivals.

We expect to see healthy growth in Hungary's tourism market over the 2015-2019 period, driven by solid domestic economic growth, and improvements in the wider European region (which represents Hungary's key source market). This will be boosted by the proliferation of low-budget airlines that will encourage additional travellers from countries...

To read the full article Register for Free or Login


Hungary Water

BMI View:

BMI View:  This quarter we have updated and expanded our water forecasts for Hungary, adding in new lines of data, including type of water source. We have substantially upgraded our treated wastewater forecasts based on improved government investment into advanced treatment facilities, and we continue to view the mains and sewage networks as the key future development areas, with losses remaining high, and a significant portion of wastewater not being collected.

The establishing of five regional utilities and over 400 municipal utility companies in the post-Soviet era, and the implementation of water charges being related to delivery costs resulted in a decentralised and incoherent water sector, with each individual municipality having autonomous control. This in turn led to inefficient and frequently overpriced water services. In addition, the maintenance and modernisation of networks was...

To read the full article Register for Free or Login

Latest Hungary Articles

  • The sudden rise in US and European bond yields in May following a long, ste...

  • A quieter week for data releases in Emerging Europe, following a swathe of ...

  • Real GDP data releases will take centre stage in Emerging Europe this week....

Latest Hungary Blogs

  • Below is a selection of key financial market stories published in Business ...

Latest Hungary Podcasts

  • The operating environment for energy firms in the European Union is ex...