4,9% growth (2019)
GDP
10M
Population
Budapest
Capital
A dynamic, fast-growing open market, and a protective shield against the crisis
Up until 2019, Hungary boasted a commendable an 4,9% growth, but like anywhere its economy is poised to shrink markedly this year as a result of COVID-19. Most optimistic experts forecast a 3% contraction this year, followed by a substantial 5% rebound in 2021, betting on the country’s vigorous pre-crisis economy and its successful containment of the epidemic to propel the recovery. Hungary’s status vis-à-vis other countries in the world is enviable. Despite drops in most key indicators, Hungary is still better off than most of its European peers. The economic protection action plan launched in April has helped save 120,000 jobs. Whether or not the new “war plan” drafted by the Government will provide a sufficient buoy to fight the second wave and reach these projections remains to be seen.
Innovation, technology and education: development drivers more than ever
Innovation is a priority for the Central European country, and the cornerstone of its overall development strategy. Thanks to Government incentives and the flood of EU funds, R&D spending jumped to a record high in 2018, reaching 1.49% of GDP. Despite the progress made, Hungary still falls with the European Innovation Scoreboard’s ‘moderate innovators’ group, ahead of Poland and Slovakia, but behind Czech Republic. The newly-created Ministry of Innovation and Technology is working to close the gap, reforming the country’s research and innovation system to make more room for applied sciences and encourage tighter collaboration between industries and universities. The country ambitions not only to produce high-tech solutions, but to be the base for their development. Pushed by upward investment trends, its capital Budapest has become one of the most vibrant start-up hubs in Europe, hosting no less than 35 higher education institutions, three of which shortlisted in the QS World University Rankings® 2020.
Tourism: time for reinvention for the European preferred destination
Hungary’s capital city, Budapest, is known as one of the most beautiful and romantic cities in Europe, loved for its outstanding quality of life, thriving cultural life, if not for its reputed historic spas and architecture. The country actually ranks within the world’s top health and medical destinations, while its diverse countryside has plenty to offer for outdoor lovers. Local tourism has been flourishing to the point that the sector accounts for 10% of the country’s GDP. The impact of the coronavirus pandemic, lockdown measures and closer border control has been extremely severe and will bear long-lasting marks for the sector’s operators. For the most resilient, the only option forward comes through a full reinvention, prioritizing domestic and regional tourism, infrastructure development and diversification. After all, with every crisis comes opportunities, for those who can grab them.
What opportunities will exist in Hungary post COVID?
In spite of the current crisis, Hungary’s investment climate has remained favorable, especially in the manufacturing, services and construction sectors, all key growth drivers. Its favorable tax regime with a reduced corporate tax and social security contributions, coupled with its strong legal framework and diverse investment schemes, are the foundations Hungary relies on to attract foreign investors. Merger and acquisition activities have intensified in the past few years, driven by several market and some state transactions. Last year saw the highest ever number of major investments in Hungary. Large-scale projects and investments in future technologies are also under consideration by the government, while the Hungarian property market has drawn a lot of attention, offering the highest returns in the CEE region.
Special Feature for Newsweek
Country Reports’ special feature on Hungary will provide exclusive insights, analysis and fresh perspectives on these topics, based on our team’s exclusive exchanges with top political and business leaders.
Distributed exclusively on Newsweek.com reaching a vast readership of 45 million, our special feature will be promoted both through a banner placed on Newsweek’s homepage for a week, and a full-page article inserted in Newsweek’s international print edition ensuring large visibility and awareness for the reader. The feature on Hungary will also be hosted in the Newsweek library (www.newsweek.com/newsweek-country-reports) for two full years.
