| Location and Size | Credit and Collections |
| Government | Risk Assessment |
| Legal System | Business Climate |
| People | Business Protocol |
| Economy | |
| Comparative Indicators |
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Location and Size
Hungary is located in Central Europe, northwest of Romania and southeast of Austria. Its territory covers a total of 93,028 sq. km., making it slightly smaller than the U.S. state of Indiana. Its capital, Budapest, is in north central Hungary and is divided into two sections by the Danube River.
Government
Hungary is a parliamentary democracy comprised of 19 counties.
Executive Branch: Chief of State, President Katalin Novak (since 10 May 2022); Head of Government – Prime Minister Viktor Orban (since 29 May 2010); Cabinet of Ministers – proposed by the prime minister and appointed and relieved of their duties by the president.
President elected by the National Assembly; prime minister elected by the National Assembly on the recommendation of the president.
Legislative Branch: 386 seat unicameral National Assembly elected by popular vote under a system of proportional and direct representation
Judicial Branch: Constitutional Court; Curia (highest court – head of Curia elected by National Assembly)
Legal System
Hungary has a civil legal system influenced by the German model.
Hungary has accepted compulsory International Court of Justice (ICJ) jurisdiction with reservations. Hungary also accepts International Criminal Court (ICC) jurisdiction.
People
- Population: 9,670,009 (2023 est.)
- Population growth rate: -0.31% (2023)
- Languages: Hungarian (official) 99.6%, English 16%, German 11.2%, Russian 1.6%, Romanian 1.3%, French 1.2%, other 4.2%; note – shares sum to more than 100% because some respondents gave more than one answer on the census; Hungarian is the mother tongue of 98.9% of Hungarian speakers
- Literacy: 99.1 % (2023 est.)
- Ethnic Make-up: Hungarian 85.6%, Romani 3.2%, German 1.9%, other 2.6%, unspecified 14.1% (2023 est.)
- Religions: Roman Catholic 37.2%, Calvinist 11.6%, Lutheran 2.2%, Greek Catholic 1.8%, other 1.9%, none 18.2%, no response 27.2%
Economy
Hungary’s successful transition from a centrally planned to a market economy is evidenced by a private sector which accounts for more than 80% of its GDP. In addition, foreign ownership of and investment in Hungarian firms is widespread.
Hungary has a diversified economy with efficient infrastructures and regulatory framework. However, its strong dependence on the fluctuating financial environment in the EU, lack of domestic investment and high unemployment has slowed growth, and put it in the position of being the most indebted country in Central Europe.
Leading Markets (2023): Germany 27.7%, Romania 5.4%, Italy 5.1%, Austria 5%, France 4.4%, Czech Republic 4.4%, Poland 4.3%
Leading Exports – Commodities (2023): machinery and equipment 58.8%, other manufactures 32.7%, food products 6.8%, raw materials 2.4%, fuels and electricity 2.3%
Leading Suppliers (2023): Germany 26.2%, Austria 6.3%, China 5.9%, Poland 5.5%, Slovakia 5.3%, Netherlands 5%, Czech Republic 4.8%, Italy 4.7%
Leading Imports – Commodities (2023): Machinery and equipment 45.4%, other manufactures 34.3%, fuels and electricity 12.6%, food products 5.3%, raw materials 2.5%
Top Industries: Mining, metallurgy, construction materials, processed foods, textiles, chemicals (especially pharmaceuticals), motor vehicles
Top Agricultural Products: wheat, corn, sunflower seed, potatoes, sugar beets; pigs, cattle, poultry, dairy products
Comparative Economic Indicators – 2023
| Hungary | Austria | Croatia | Romania | Serbia | Slovakia | |
| Population (millions)* | 9.82 | 8.79 | 4.27 | 21.46 | 7.08 | 5.44 |
| Population growth rate (%)* | -0.26 | 0.42 | -0.51 | -0.35 | -0.47 | -0.02 |
|
Age Structure (%)
(15 to 64 years old) |
65.84 | 66.55 | 65.89 | 68.93 | 66.67 | 68.84 |
|
Age Structure (%)
(65+ years old) |
19.5 | 19.44 | 19.91 | 16.76 | 18.98 | 15.97 |
| Literacy (%) | 99.1 | 98.0 | 99.3 | 98.8 | 98.8 | 99.6 |
| Unemployment rate (%) |
4.2 |
5.5 | 12.4 | 4.9 | 14.1 | 8.1 |
| Inflation (%) | 2.4 | 2.2 | 1.1 | 1.3 | 3.1 | 3.4 |
| Population below poverty line (%) | 14.9 | 3.0 | 19.5 | 22.4 |
8.9 |
12.3 |
| GDP** (USD billion) | 289.6 | 441.0 | 102.1 | 483.4 | 105.7 | 179.7 |
| GDP real growth rate (%) | 4.0 | 3.0 | 2.8 | 6.9 | 1.9 | 3.4 |
| GDP per capita** (USD) | 29,600 | 50,000 | 24,700 | 24,600 | 15,100 | 33,100 |
| Public debt (% of GDP) | 73.6 | 78.6 | 77.8 | 36.8 | 62.5 | 50.9 |
| Industrial production growth rate (%) | 7.4 | 6.5 | 1.2 | 5.5 | 3.9 | 2.7 |
| Exports (USD billions) | 98.74 | 156.7 | 13.15 | 64.58 | 15.92 | 80.8 |
| Imports (USD billions) | 96.3 | 158.1 | 22.34 | 78.18 | 20.44 | 80.07 |
| Reserves of foreign exchange and gold (USD billions) | 28.0 | 21.57 | 18.82 | 44.43 | 11.91 | 3.62 |
| Currency | Forint HUF |
Euro EUR |
Kuna HRK |
New LEI RON |
Dinar RSD |
Euro EUR |
| Exchange rates (per USD) 9/20/2023 | 286.16 | 0/89 | 6.55 | 4.19 | 104.31 | 0.89 |
| Exchange rates (per EUR) 9/20/2023 | 323.08 | n/a | 7.40 | 4.73 | 117.78 | n/a |
Economic Data from CIA World Factbook
Credit and Collections
Hungarian Statutes of Limitations:
- Open Account: 5 years
- Promissory Notes: 5 years
- Written Contracts: 5 years
- Oral Agreements: 5 years
Dispute Resolution
Hungary has accepted binding international arbitration in cases where the resolution of disputes between foreign investors and the state is unsuccessful. It is a member of the International Center for the Settlement of Investment Disputes (ICSID) and a signatory to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
In the last few years mediation has become a tool of increasing importance for dispute settlement to avoid lengthy court procedures.
Risk Assessment
Coface Country Rating: B — Political and economic uncertainties and an occasionally difficult business environment can affect corporate payment behavior. Corporate default probability is appreciable.
Coface Business Climate Rating: A3 — The political and economic situation is good. A basically stable and efficient business environment nonetheless leaves room for improvement. Corporate default probability is low on average.
Business Climate
Hungary maintains an open economy and attracting foreign investment remains a priority for the Hungarian government. Hungary aggressively seeks foreign investment. It encourages investors both to purchase privatized firms and to implement “greenfield” investment, giving them full rein to manage the companies.
Leading foreign investors include Germany, Austria, the Netherlands, and the United States. Forty of the 50 largest U.S. multinationals are present in Hungary.
As the result of considerable privatization of former state-owned enterprises (SOE), few SOEs remain. These operate primarily in strategic sectors such as national security, energy and transportation. Up to 100 percent foreign ownership is permitted with the exception of designated holdings in some defense-related industries. Currently, foreign firms control 66% of manufacturing, 90% of telecommunications and 60% of the energy sector.
Commercial law in Hungary is relatively well developed. However, there remains a need to continue to revise the corporate legal code, improve the judicial and administrative capacity for enforcing it and speed up the judicial process for foreign investors.
Economic Freedom: Hungary’s economic freedom score is 64.1, making its economy the 44th freest in the Heritage 2023 Index. Hungary is ranked 31st out of 44 countries in the Europe region, and its overall score is well above the world average.
Market Access: As a member, Hungary applies rules which reflect the EU’s rather liberal foreign trade policy. There are no currently operating custom free zones in Hungary. Although the Ministry of National Economy is open to nominating areas for such zones, there currently seems to be little demand for this service.
Although improvements have been made, obstacles and disincentives to investment remain, including a lack of transparency and predictability. Reports of corruption, particularly in the government procurement sector and barriers related to excessive red tape have also been cited.
Regulatory System: The regulatory process in Hungary is relatively open and transparent. Tax, labor, environment, health and safety laws are generally consistent with EU regulations. Some companies operating in Hungary, however, cite the recent “crisis taxes” as being inconsistent with EU regulations. These taxes target certain industries and sectors while exempting others.
Intellectual Property Rights: As a result of its agreement with the European Patent Convention, Hungary has accordingly amended the Hungarian Patent Act. It is also a party to the WTO Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement and most other major international IPR agreements.
Exchange Control: Hungary provides free conversion of currencies. The Hungarian Forint (HUF) is freely convertible for foreign investors. Profit and capital transfers are authorized at the central Bank, provided that involved sums are deposited in a bank account in convertible Forints. The Hungarian National Bank is working to slowly devalue the forint to make a gradual transition to the euro.
Corruption: Hungary has adopted a national strategy for combating corruption which includes a growing legal framework designed to support the efforts of its Ministry of Justice in this regard. As a party to the OECD Anti-Bribery Convention, Hungary has incorporated convention provisions, as well as OECD and EU requirements on the prevention of bribery, into its penal code.
Political Violence: Political violence has not been a characteristic of the political landscape in Hungary. There is little cause to expect insurrections, political terrorism, or interstate war. There has been no violence directed against foreign-owned companies, although Hungary’s economic troubles have contributed to an increase in political extremism.
Business Protocol
- Although Hungarians are transactional and do not require long-standing personal relationships in order to conduct business, being introduced by someone they know and trust can often help.
- Hungarians are emotive speakers who say what they think and expect you to do the same. They do not like euphemisms or vague statements and view eye contact as indicative of sincerity.
- Appointments are necessary and should be made 2 days in advance and in writing.
- Punctuality for all social situations is taken extremely seriously. If you expect to be delayed, telephone immediately and offer an explanation. It is considered extremely rude to cancel a meeting at the last minute and could ruin your business relationship.
- Business is conducted slowly. Deals in Hungary cannot be finalized without a lot of eating, drinking and entertaining.
- Hungarians are skilled negotiators. Avoid confrontational behavior or high-pressure sales tactics.
- Contracts function as statements of intent. It is expected that if circumstances change, the contract will accommodate the revised conditions.
- Business dress is formal and conservative. Men should wear dark business suits with a white shirt and tie. Women should wear either business suits or elegant dresses, complimented with good quality accessories.
- Business cards are exchanged without formal ritual. Have one side of your card translated into Hungarian. The Hungarian side should list your surname before your first name, Hungarian style. Include any advanced university degrees and the founding date of your company on the card.
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