Guidance

Overseas business risk: Hungary

Updated 21 November 2023

1. Political and economic

Hungary is a parliamentary republic and a multiparty democracy. Hungary is a member of the North Atlantic Treaty Organization (NATO), the Organization for Security and Co-operation in Europe (OSCE), and the European Union (EU).

The last general election was held on 3 April 2022. The governing Fidesz party – in alliance with the Christian Democrats (KDNP) – secured a two-thirds majority in Parliament (for the fourth time in a row), which allows them to amend a special class of laws including the Fundamental Law (the Constitution). The Democratic Coalition (DK) is the largest opposition party.

Hungary is a high-income country (GDP per capita was 17,296 USD in 2022) with a mixed and open economy and a positive trade balance.

According to the latest data (2022), GDP growth was 4,6%, the budget deficit was 6,2% and the inflation rate was 14,5% yoy. The inflation rate currently (July 2023: 17,6%) is the highest  in the EU due to significantly increased energy prices and the war in Ukraine. The Hungarian forint (HUF) is the official currency of Hungary. The average volatility of the Hungarian forint is 11%.

The Hungarian financial market is a traditional, domestic bank-dominated system. The largest institutions are the Hungarian OTP Bank and the newly established Hungarian Bank Holding. The other major market participants are subsidiaries of European parent undertakings. The Hungarian banking system is stable, and has considerable capital reserves, rendering it resilient to risks.

In the most recent assessment of credit rating agencies, Hungary is in the investment grade. Hungary is in the category of Baa2 at Moody’s, BBB at Standard & Poor’s and BBB at Fitch Ratings. These agencies consider Hungary’s outlook as stable.

Regarding the labour market, there is almost full employment in Hungary (the unemployment rate is 3.8% in 2023).  The lack of skilled labour is currently one of the biggest challenges for the Hungarian economy.

Looking ahead, real GDP is projected to stagnate in 2023, before rebounding by 2.5% in 2024. Inflation is projected to decrease significantly after mid-2023. Projection for 2024 is 6% for inflation. Monetary policy is expected to remain restrictive and fiscal policy will tighten in 2023, both of which will help to contain inflation. Reducing the budget deficit (6.2% in 2022) and reaching an agreement on the delivery of EU funds will be key to maintain investor confidence and create fiscal space to finance the green transition in Hungary. 

Hungarian economic performance is fundamentally export-driven and tied to its major – mainly EU – partners. Almost four fifths of Hungarian foreign trade flow is to EU countries. Germany is Hungary’s largest trade partner, concerning export and import as well, but regional markets (Slovakia, Czechia, Poland, and Austria) are also important. Total UK exports to Hungary amounted to £2.7 billion in 2022. The top 3 goods exported from the UK to Hungary are mechanical power generators, automotive industry goods and chemicals. The UK has a market share of 2.2% within the goods and services market in Hungary.

The UK is one of the largest foreign investors in Hungary, British companies carried out nearly 6 billion USD worth of investment in Hungary. More than 900 UK companies are operating in Hungary, employing over 50,000 people.

The UK government can provide finance or credit insurance specifically to support UK exports through UK Export Finance – the UK’s export credit agency. For up-to-date country specific information on the support available, see UK Export Finance’s country cover policy and indicators.

2. Human rights

Hungary has been a member of the International Labour Convention since 1992. See International Labour Standards country profile of Hungary.

With 54.2 out of 100 points, Hungary ranks 25th in the EU on the Gender Equality Index.

According to the 2020 Gender Pay Gap report for Hungary, the female employees’ earnings were on average 17.2 percent lower than men’s in the private sector and 2.9 percent lower than men’s in the public sector.

According to the ILGA Rainbow Map for 2022, Hungary dropped 3 places (29th of 48) on account of the parliament adopting a number of amendments discriminating against LGBT people, including a ban on the “portrayal and the promotion of gender identity different from sex at birth, the change of sex and homosexuality” for persons under 18.

3. Bribery and corruption

Bribery is illegal. It is an offence for UK nationals and bodies incorporated under UK law to bribe anywhere in the world.

In 2022, Hungary was ranked 77th on the list of 180 in the Transparency International’s Corruption Perception Index (CPI). Ratings for Hungary show no sign of improvement, currently ranked last among EU member states. TI have repeatedly voiced concern over both the limited transparency of public procurement and the government’s reluctance to tackle the issue of corruption. In 2017 the Government introduced legislation to make it more difficult for anti-corruption and transparency NGOs receiving funds from abroad to operate in Hungary.

Concerned at the Hungarian government’s administration of EU Funds, the EU Commission triggered the Conditionality Mechanism against Hungary in April 2022, citing public procurement issues, conflicts of interest, systemic irregularities, a high rate of single bidding procedures and a lack of appropriate investigation and enforcement.

The perception of corruption remains high. 87% of respondents of a survey conducted by Eurobarometer in 2020 said they were aware of bribery.

In addition, the tax and social contribution bases are narrow. Most typical cases of hidden economy are illegal employment (especially in the construction and agriculture sector), services without invoices and abuse related to wages. In 2013 the government introduced a new cash register machine system (through which every cash register is directly linked to the Tax Authority) which has supported transparency significantly. In 2015 the government launched a new electronic road transportation control system in the Hungarian road transit (EKAER), which was designed to minimize the possibility of VAT fraud.

The volume of tax fraud is highest in micro businesses and large companies, with documentation in the former often missing. Approximately 80% of tax fraud cases detected by the Tax Authority (NAV) are related to VAT.

Please read the information provided on our bribery and corruption page.

Visit the Business Anti-Corruption portal that provides advice and guidance about corruption in overseas markets.

4. Terrorism threat

In general, the threat level from terrorism is relatively low in Hungary, but cannot be ruled out.

Please read the information provided on our Terrorism threat page and the latest Travel Advice for Hungary from the Foreign, Commonwealth & Development Office.

5. Protective security advice

Although there has been no evidence of British organisations being specifically targeted, high profile organisations are advised to remain vigilant and regularly review their security measures.

Visitors are advised to take sensible precautions against risks common in Western Europe and to maintain at least the same level of personal security awareness in Hungary as in the UK.

As above, for up to date advice on personal security and crime in Hungary, read the latest Travel Advice for Hungary from the Foreign, Commonwealth & Development Office.

6. Organised crime

Hungary’s overall crime rate has slightly decreased over the past few years, but fraud and property crime remain a problem. Violent crime is on a downward trend, and street theft is no worse than in other European countries. Organised crime groups in Hungary control prostitution, stolen car rings, gambling, and narcotics trafficking.

Some Eastern European trafficking circles (who mainly traffic people for prostitution and labour) are based in and/or run from Hungary. The Interior Ministry and the Police have stepped up efforts to tackle trafficking and cooperation with Western European countries (usual destination of trafficking) is good but the issue remains a concern.

Read the information provided on our Organised crime page.

For advice on serious organised crime visit the National Crime Agency (NCA) website.

7. Intellectual property

Hungary’s copyright law complies with international norms and the country has implemented the relevant EU Directives.

Intellectual Property rights are territorial, which means they only give protection in the countries territory where they are granted or registered. If you are thinking about trading internationally, then you should consider registering your IP rights in your export markets.

For information on registering your trade mark or on obtaining a patent in Hungary, visit the Hungarian Intellectual Property Office’s website.

For information on EU wide protection of trade marks and design rights, visit the European Union Intellectual Property Office (EUIPO).

The European Patent Office (EPO) governs a regional system to provide protection of patents covering EU, EEA member states and the UK.

Refer also to the website of the World Intellectual Property Organisation (WIPO), and the Madrid Protocol for the international registration of marks. Read the information provided on our Intellectual Property page.

8. Contact

Contact the Department for Business and Trade (DBT) team in Hungary for further information.