Post COVID-19, Hungary’s promising economic prospects
With a hefty 24 percent growth in foreign direct investment (FDI) from 2018 to 2019, Hungary stood out as a country to watch before the COVID-19 crisis hit. Now, more than seven months after the European outbreak of the pandemic, Hungary’s economic figures and investment potential are once again back on track. Here’s a summary of recent government measures, as well as foreign and domestic investments in Hungary.
Since 2010, Hungary’s economic policy has rested on two main pillars. First, we have made it a priority to attract as many investors as possible. But not just any investments. We have emphasized those that come from high value-added industries. Our second goal was to start building a favorable economic environment for Hungarian small- and medium-sized enterprises to help support these flexible components of the economy.
In 2019, compared to the previous year, foreign direct investment (FDI) in Hungary registered record-breaking growth of 24 percent, and that same year, Hungary welcomed 101 investments in 21 different sectors of the economy, from 20 countries. While the coronavirus did hit the economy’s more sensitive industries, some key economic figures, such as the unemployment rate, were back at their pre-COVID levels by mid-August or early-September.
This, in fact, is largely due to the government’s swift and effective response to the economic setback brought on by the coronavirus pandemic. To build on what has already proven effective, the Hungarian Parliament voted last week to extend until next summer one of the cornerstones of the government’s COVID-management package: the moratorium on loan repayments. With this step, according to expert calculations, the Hungarian government will keep nearly HUF 450 billion (EUR 1.225 billion) in the pockets of families and businesses.
In terms of recent foreign investments coming to Hungary, two Chinese companies, Huawei and Chervon Auto, announced multi-billion HUF investments last week. While Huawei will establish a new R&D center in Budapest, employing more than 100 Hungarian engineers, Chervon will set up a production hall near Miskolc, worth HUF 17.5 billion, including 5.3 billion in non-refundable support from the Hungarian government.
At the same time, Foreign Minister Péter Szijjártó inaugurated pharmaceutical firm Sanofi’s brand new shared service center in Budapest, which will employ nearly 350 people by the end of 2022 and provide financial, accounting and human resources services in seven languages. At the opening ceremony, the FM highlighted that Hungary is a regional leader in terms of service centers, with 120 businesses employing some 55,000 Hungarians today.
On the domestic front, cladding materials manufacturer Zalakerámia Zrt. recently announced a HUF 22 billion investment with the goal of extending capacity and becoming the region’s leading player in the sector by 2025.
Hungary would have been easily destroyed economically by a similar epidemic more than a decade ago. But today, the country’s economy has become vigorous, and this is why it will bounce back stronger than ever after the COVID-19 crisis.