Hungarian Economic Information

Some indepth information about Hungarys economy

Hungary has made the transition from a centrally planned to a market economy, with a per capita income nearly two-thirds that of the EU-25 average. Hungary continues to demonstrate strong economic growth and acceded to the EU in May 2004.

The private sector accounts for over 80% of GDP. Foreign ownership of and investment in Hungarian firms are widespread, with cumulative foreign direct investment totaling more than $60 billion since 1989.

Hungarian sovereign debt was upgraded in 2000 - together with the Czech Republic, Hungary holds the highest rating among the Central European transition economies. Rating agencies, however, have expressed concerns over Hungary's fiscal and current account deficits.

Inflation has declined from 14% in 1998 to 3.7% in 2006. Unemployment has persisted above 6%. Hungary's labor force participation rate of 57% is one of the lowest in the Organization for Economic Cooperation and Development (OECD). Germany is by far Hungary's largest economic partner.

Policy challenges include cutting the public sector deficit to 3% of GDP by 2008, from about 6.5% in 2006, and orchestrating an orderly interest rate reduction without sparking capital outflows.