Hungary enjoys a perfect location in terms of market access. Situated between Western Europe and Asia, the Magyar nation is a true portal between these two continents. From a logistics and infrastructures perspective, four major highways serve the country. Access by rail is also very easy, and the airports have direct flights to Europe, North America, South Asia, and the Middle East. In addition, the Danube, its emblematic river, provides fast access to the Black Sea and the North Sea.
Also, the fact that Hungary has been a member of the European Union since 2004 ensures that European and global standards of quality are respected. Its workforce is also known to be very highly qualified, and less expensive than in Western Europe. From a production cost standpoint, it is widely recognized to be clearly more competitive than elsewhere in Europe. It is also important to note that the Hungarian government has implemented several investment premiums and aids to encourage companies to come set up shop in the country.
Its membership in the EU will soon see it benefit from the Comprehensive Economic and Trade Agreement (CETA), which will come into effect in 2017.
The Hungarian Economy
In a context of global economic difficulties, Hungary posted a higher growth rate (3%) than the average in the European Union (1.9%). The Hungarian economy is characterized by its service sector, which accounts for close to two thirds of its GDP and employs nearly 65% of its active population. It concentrates the bulk of foreign direct investment, particularly in the areas of large-scale distribution, telecommunications, and finance. As for the industrial sector, it represents 31% of the GDP and is also very open to foreign investment. The automotive and electronics sectors are the country’s two main sectors, representing 30% of exports and 15% of the GDP. The agricultural sector, which had been predominant in the economy for a long time, today represents 4.5% of the GDP.
The Hungarian economy is of relatively modest size but is distinguished by its openness. The country also stands out from its Central European neighbours through its drawing power for Foreign Direct Investment (FDI), despite a somewhat less stable political context.
For 2016, Hungarian economic growth is estimated at 2.6% (World Bank). In the World Bank’s ease of doing business report, Hungary is in 42nd place, and got a perfect score as far as cross-border trade is concerned. This result was further strengthened by a reform of electronic customs declarations, which aimed to reduce export and import times.
The most significant exports from Canada include electrical machinery and equipment, fuel, optical and medical materials, vehicles, and plastics. Canada’s main imports from Hungary include electrical machinery, pharmaceutical products, vehicles, and optical and medical materials.
Located close to several European production and consumption zones, Hungary is considered to be a strategic hub. Crossed by 4 trans-European corridors and boasting abundant ultra-modern transportation infrastructures, the country can serve as an ideal logistical platform for Quebec investors.
During the Soviet period, Hungary was characterized by the predominance of heavy industry focused on transportation. Building on this know-how, Hungary was able to draw numerous automobile manufacturers and suppliers to set up assembling plants in the country during the 1990s. Today, the automotive industry has become a key sector of the Hungarian economy, with over 600 active firms. This sector could hold several opportunities for Quebec companies seeking to benefit from Hungary’s many competitive advantages, such as a qualified workforce, reduced salary costs, and a well-rooted automotive tradition.
The Hungarian pharmaceutical sector is one of the most advanced in Central and Eastern Europe. The country has for many years been recognized as one of the best performing on the European and global market. The Hungarian pharmaceutical sector has been growing exponentially since 2007 (+ 7% per year) and offers numerous opportunities for Quebec companies in this sector. Despite the many reforms the Hungarian government is putting into place in the health care sector, the budget for pharmaceuticals and health care has been increased. As in other sectors, the government offers subsidies and premiums when new jobs are created or investments are made. Note that the coming Comprehensive Economic and Trade Agreement (CETA), which is scheduled to come into effect in 2017, will soon facilitate trade of pharmaceutical products between Canada and members of the euro zone.
The ICT/Electronics sector is an engine of the Hungarian economy. A great many foreign companies are already active in Hungary, and the country is the leading producer of electronic products and components in Central Europe. In addition, many companies have created major research centres that can rely on several high-level universities.
Constantly evolving worldwide, the renewable energy sector (particularly biomass and solar energy) is no exception is Hungary. Currently, only 8% of Hungarian electricity production comes from renewable energy, but this is constantly increasing. Since 2014, many bids have been launched for the renovation and construction of energy production structures in the country. Consequently, there is much to attract Quebec companies active in this sector.
Hungary, facts and figures:
- A population of 9.86 million inhabitants
- A GDP of US $138.3 billion (2014)
- GDP growth of 3% in 2015
- Exports representing 89.6% of its GDP
- Quebec exports in the amount of $141.4 million in 2015, representing 12.1% of total Canadian exports
- Quebec imports from Hungary amounting to $130.2 million in 2015
WHO SHOULD ATTEND?
- Entrepreneurs seeking to enter the Hungarian market or who are already active on the market but want to learn more.
- The activity will be of particular interest to companies in the following sectors:
- Smart cities
- Urban planning
- Public services
- Automobiles and trucks
- Transportation, logistics
- Environment, energy, electrification
- ICT, electronics
- Health care, pharmaceuticals, and medical instruments
- Construction and infrastructure