Economy of Hungary
The economy of Hungary is a developing, high-income mixed economy that is the 53rd-largest economy in the world with $265.037 billion annual output, and ranks 41st in the world in terms of GDP per capita measured by purchasing power parity. Hungary has a very high human development index and a skilled labour force, with the 22nd lowest income inequality by Gini index in the world. Hungary has an export-oriented market economy with a heavy emphasis on foreign trade; thus the country is the 35th largest export economy in the world. The country had more than $100 billion of exports in 2015, with a high trade surplus of $9.003 billion, of which 79% went to the European Union and 21% was extra-EU trade. Hungary's productive capacity is more than 80% privately owned, with 39.1% overall taxation, which funds the country's welfare economy. On the expenditure side, household consumption is the main component of GDP and accounts for 50% of its total, followed by gross fixed capital formation with 22% and government expenditure with 20%.
In 2015 Hungary attracted $119.8 billion in FDI and invested more than $50 billion abroad. As of 2015, the key trading partners of Hungary were Germany, Austria, Romania, Slovakia, France, Italy, Poland and the Czech Republic. Major industries include food processing, pharmaceuticals, motor vehicles, information technology, chemicals, metallurgy, machinery, electrical goods, and tourism. Hungary is the largest electronics producer in Central and Eastern Europe. Electronics manufacturing and research are among the main drivers of innovation and economic growth in the country. In the past 20 years Hungary has also grown into a major center for mobile technology, information security, and related hardware research.
The employment rate in the economy was 68.7% in January 2017, while the employment structure shows the characteristics of post-industrial economies. An estimated 63.2% of the employed workforce work in the service sector, industry contributed by 29.7%, while agriculture employed 7.1%. The unemployment rate was 3.8% in September–November 2017, down from 11% during the Great Recession. Hungary is part of the European single market, which represents more than 448 million consumers. Several domestic commercial policies are determined by agreements among European Union members and by EU legislation.
Large Hungarian companies are included in the BUX, the Hungarian stock market index listed on Budapest Stock Exchange. Well-known companies include Graphisoft, Magyar Telekom, MBH Bank, MOL Group, Opus Global, OTP Bank, RÁBA Automotive Group, Gedeon Richter and Zwack Unicum. Hungary also has a large number of specialised small and medium enterprises, for example many automotive industry suppliers and technology start ups.
Budapest is the financial and business capital of Hungary. The capital is a significant economic hub, classified as an Alpha- world city in the study by the Globalization and World Cities Research Network and it is the second fastest-developing urban economy in Europe. The per capita GDP in the city increased by 2.4% and employment by 4.7% compared to the previous year, 2014. On the national level, Budapest is the primary city of Hungary for business, accounting for 39% of the national income. The city had a gross metropolitan product of more than $100 billion in 2015, making it one of the largest regional economies in the European Union. Budapest is also among the top 100 GDP performing cities in the world, as measured by PricewaterhouseCoopers. In a global city competitiveness ranking by the Economist Intelligence Unit, Budapest is ranked above Tel Aviv, Lisbon, Moscow and Johannesburg, among others.
Hungary maintains its own currency, the Hungarian forint, although the economy fulfills the Maastricht criteria with the exception of public debt. The ratio of public debt to GDP is significantly below the EU average at 66.4% in 2019. The Hungarian National Bank was founded in 1924, after the dissolution of the Austro-Hungarian Empire. It is currently focusing on price stability, with an inflation target of 3%.
The economy of Hungary is a high-income mixed economy, and a member of the European Union's single market. In recent years, it has become one of the faster-growing economies in the EU, transitioning towards an export-oriented market economy with a strong focus on foreign trade and investment, particularly in the automotive and electronics sectors.
According to the International Monetary Fund, Hungary's estimated annual output was $219 billion in 2024, ranking it as the 57th-largest economy in the world. In terms of GDP per capita measured by purchasing power parity, it ranked 42nd globally at approximately $47,213.
Hungary maintains a **very high Human Development Index**, ranking 47th in the 2023/24 report, and possesses a skilled labour force. The country has one of the lowest income inequalities in the EU, with a Gini coefficient of 29.6 in 2023. The economy is heavily reliant on exports, primarily to other EU nations. In 2023, its goods exports reached €149.2 billion, generating a significant trade surplus of €9.8 billion. On the expenditure side, household consumption accounts for approximately 50% of GDP, followed by gross fixed capital formation and government expenditure.
Key industries include automobile manufacturing, battery production, electronics, pharmaceuticals, and information technology. After facing the highest inflation in the EU in 2023, policy measures successfully brought the rate down to a forecasted 3.5% for 2025. The unemployment rate remained low at 4.1% in early 2025, while the government debt-to-GDP ratio was projected to be around 72.0%. Budapest, the capital, serves as the nation's primary financial and business hub.
History
Árpád Age
In the age of feudalism the key economic factor was land. The new economic and social orders created private ownership of land. There are three forms of existence: the royal, ecclesiastical and secular private estate. The royal estate of the Árpád dynasty had evolved from the tribal lands.The origin of the secular private holdings dates back to the conquest tribal common estates, which are increasingly in charge of the society and grows over private ownership of the becoming leaders.
However, from the founding of the state the royal gift also entered the multiplying factors secular private property line. This organization developed a feudal estate, which had two elements: the ancient estate and the possessions which were awarded by Saint Stephen I, and then the royal donations. Béla III was the wealthiest European monarch of his time, according to a list of his revenues, but the reliability of the list is questioned. Over the holder unrestricted right granted by the latter lineal heir almost returned to the king. In the Order of the laws changed in 1351, which abolished the nobility's possessions for free disposal. It forbidden the nobility to sale their inherited land.
The Carpathian Basin was more suitable for agriculture than large livestock grazing, and therefore increased steadily in the former weight. In the 11th and 12th centuries natural farming and soil changer tillage systems met: grazing the animals, and they used the fertilized land until depletion. The most important tools for the agriculture were the plow and the ox.
Anjou Age
Modern Age
The Hungarian economy prior to World War II was primarily oriented toward agriculture and small-scale manufacturing. Hungary's strategic position in Europe and its relative high lack of natural resources also have dictated a traditional reliance on foreign trade. For instance, its largest car manufacturer, Magomobil, produced a total of a few thousand units. In the early 1920s the textile industry began to expand rapidly, by 1928 it became the most important industry in the foreign trade of Hungary exporting textile goods worth more than 60 million pengős in that year. Companies like MÁVAG exported locomotives to India and South-America, its locomotive no. 601 was the largest and most powerful in Europe at the time.Post-war Hungarian communism
From the late 1940s, the Communist government started to nationalize the industry. At first, only factories with more than 100 workers were nationalized; later, this limit was reduced to only 10. In the agriculture, the government started a successful program of collectivization. From the early 1950s, more and more new factories were built. This rapid and forced industrialization followed the standard Stalinist pattern in an effort to encourage a more self-sufficient economy. Most economic activity was conducted by state-owned enterprises or cooperatives and state farms. In 1968, Stalinist self-sufficiency was replaced by the "New Economic Mechanism", which reopened Hungary to foreign trade, gave limited freedom to the workings of the market, and allowed a limited number of small businesses to operate in the services sector.In this era great social progress was made, for example the population between 20 and 24 years old with less than 8 years of education decreased from 71.2% in 1949 to 4.9% in 1984, the annual consumption of meat and fish increased from 35 kilograms in 1950 to 78 in 1984, the percentage of homes with electricity increased from 46.6% in 1949 to 99% in 1984, in the same period the percentage of homes with running water increased from 17.1% to 76.6%, the number of cars per 1,000 people increased from 3 in 1960 to 122 in 1984, in the case of televisions from 10 to 276, in the case of washing machines from 45 to 317, in the case of refrigerators from 4 to 328, infant mortality fell from 91 in 1949 to 20.4 in 1984.
Per capita national income grew by 343% from 1950 to 1983, real wages by 136% and real incomes by 251% over the same period, meanwhile real value of per capita social benefits rose by 432% from 1960 to 1980. From 1949 to 1984, Hungary's GDP grew as fast as that of countries like Spain.
Also poverty was greatly reduced, although from 1962 to 1982 the price index rose by 96%, people with less than 800 forints were 55% in 1962 and after 20 years only 6.4% of those with less than 1800 forints. In 1987, inequality was minimal, with a Gini coefficient of 0.21, and poverty was the same, with a 1% poverty rate.
Although Hungary enjoyed one of the most liberal and economically advanced economies of the former Eastern Bloc even though at the end of the 1980s state employment represented 94% of the total, both agriculture and industry began to suffer from a lack of investment in the 1970s, and Hungary's net foreign debt rose significantly—from $1 billion in 1973 to $15 billion in 1993—due largely to consumer subsidies and unprofitable state enterprises. In the face of economic stagnation, Hungary opted to liberalize further by passing a joint venture law, instating an income tax, and joining the International Monetary Fund and the World Bank. By 1988, Hungary had developed a two-tier banking system, and had enacted significant corporate legislation that paved the way for the ambitious market-oriented reforms of the post-communist years.