Hungary has made the transition from a centrally planned to a market economy, with a per capita income nearly two-thirds of that of the EU-25 average. When the country acceded to the EU in May 2004, annual GDP growth was well above EU average, exports soared and per capita foreign direct investment was among the highest in the region.
Foreign ownership of and investment in Hungarian firms are widespread, with cumulative foreign direct investment totalling more than $100 billion since 1989. Foreign capital is attracted by skilled and relatively inexpensive labour, various tax incentives, well developed infrastructure, and a good telecommunications system.
In the recent years, due to external and internal pressures, the Hungarian economy experienced a significant slowdown. As a necessary response to the fast growing macroeconomic imbalances fiscal consolidation has become the focus of the government’s economic policies. The international fiscal and economic crisis, the ruthless delevereging all over the world, hit particularly severely the Hungarian economy which was already undergoing painful budgetary adjustments. In the autumn of 2008, following the collapse of the international interbank market, Hungary was provided a standby credit facility of USD 25 billion by the IMF, World Bank and the EU.
The Hungarian economy began to stabilize by using the substantial external funding and by corrective measures involving elements of the basic redistribution system. Income and consumption losses continue to be substantial but at the macroeconomic level the adjustment seems to be working well. Hungary’s macroeconomic outlook remained weak throughout 2009 on falling demand in its main European export markets and slowing domestic consumption. Growth prospects, however, are likely to improve beyond 2009, owing to the expected pick-up of economic activity in Europe as well as to the much healthier balance of public finances.
Irish Hungarian two way trade and the bilateral economic relations have increased manyfold in the course of the past two decades. While the total turnover between the two countries was a mere EUR 21 million in 1989, today the annual value of Irish-Hungarian trade is close to EUR 600 million. Irish investors and developers are substiantial players in the Hungarian property market, and dozens of Irish companies have established subsidiaries in Hungary with such well known names among them as CRH, Kingspan, AIB, Quinlan and others.table