Hungary

Situated in the heart of Central Europe, Hungary is a country with a rich history, culture, and beautiful nature.

The government's focus on economic stability, its advantageous geographic location, and its EU membership position Hungary as a promising market for investment and business.

General information

The official name of the country is Hungary. It occupies an area of ​​93,036 km² (108th largest in the world). The population is approximately 9,518,198 (as of the beginning of 2025).

Hungary's population is monoethnic. The majority of residents are Hungarians (92.3%). National minorities include Roma, Germans, Slovaks, Romanians, Croats, Serbs, Poles and Ukrainians, Bulgarians and Greeks, Armenians, Rusyns, and Slovenes. About 2.5 million Hungarians live in neighboring countries, and another 1.5 million people of Hungarian descent live in the United States, Canada, Israel, Australia, South Africa, and several countries in Western Europe and Latin America.

The most common religious denomination in Hungary is Catholicism (54.5%). The second most common religion is Protestantism (19.5%), with other religions and atheism also common (35%).

The official language of Hungary is Hungarian. It belongs to the Finno-Ugric language group, and its relatives include Khanty and Mansi (languages ​​of the small peoples of Western Siberia), as well as Estonian and Finnish.

The official currency of the country is the Hungarian forint.

Budapest is the capital of Hungary. Often called the "Pearl of the Danube," Budapest is not only the political and cultural center of Hungary but also one of the most vibrant and historically rich capitals in Europe, with its historic center listed as a UNESCO World Heritage Site.

The city is also the economic hub of Hungary, making a significant contribution to the country's gross domestic product. The city's economy is diverse and based on sectors such as finance, tourism, real estate, information technology, and manufacturing.

As the country's financial center, Budapest is home to the headquarters of numerous domestic and international banks.

Debrecen is the second most populous city in the country. Its main industries include pharmaceuticals (TEVA, Gedeon Richter), mechanical engineering, and automotive manufacturing (Continental, BMW). Hortobágy National Park, a UNESCO World Heritage Site, is located 40 km from Debrecen.

Szeged is the third-largest city in Hungary and one of the country's major educational centers. The city's modern economy is based on the food and light industries. Szeged is considered the Hungarian center of sausage production, including salami, and other meat products. It is also the capital of paprika, the famous Hungarian pepper, which began to be cultivated in the vicinity of the city as early as the 15th century. In 1881, János Kotány founded the Kotány company, producing spices and seasonings.

Pécs is an important transportation hub and the industrial and cultural center of Southern Transdanubia. One of the city's largest enterprises, providing the largest number of jobs, is the University of Pécs.

The city is home to various industries: mechanical engineering (including electrical engineering), woodworking, leather, porcelain, and tobacco manufacturing, and brewing. The Pécs Brewery, operating since 1848, is one of the four most famous breweries in Hungary. The Zsolnay porcelain manufactory is particularly renowned.

Administratively, the country is divided into 19 regions and a capital city with a special status.

History, geography, culture, mentality

The territory of modern-day Hungary was once inhabited by Celts, Illyrians, and groups of Germanic tribes. In the 1st century, the Romans arrived: determined to expand their empire, they conquered the Middle Danube basin and founded Pannonia. This Roman province lasted for nearly 400 years, until the arrival of the Hunnic armies. After the collapse of the Hunnic empire, the Ostrogoths, Avars, and Franks ruled the region at various times. Finally, in the 9th century, the Magyars—nomadic Hungarian tribes—invaded this corner of Europe.

According to scholars, the ancestors of today's Hungarians began their long journey to the banks of the Danube from Western Asia. They formed a medieval state that included, among other things, the territory of the Middle Danubian Plain, Transylvania, and Transcarpathia.

In 1000, Hungary became a Christian kingdom. And all thanks to its then ruler, Stephen I of the powerful Árpád dynasty. He received the blessing of Pope Sylvester II himself.

The kingdom's economy flourished until the early 14th century. This was despite the fact that in 1241, most of Hungary's cities were devastated by the Mongol-Tatars. The then king, Béla IV, managed to rebuild the country in a matter of years.

Hungary's decline began in 1301, shortly after the death of the childless Andrew III, the last ruler of the Árpád dynasty. From that moment on, not only local nobility but also foreign royal houses, including the all-powerful Habsburgs, began to lay claim to the Hungarian throne.

The frequent changes of rulers led to both political and social instability. In 1541, part of Hungary was captured by Turkish troops, resulting in the kingdom being divided into three regions. The central region was controlled by the Turks, Transylvania was also under Turkish influence, and the northern and western lands were under the control of the Austrian Habsburgs.

At the end of the 17th century, the Austrians succeeded in recapturing all Hungarian territories from the Turks, and power passed entirely to the powerful royal house. It was only in 1867 that a dual monarchy emerged—Austria-Hungary. It consisted of two de facto sovereign states, albeit under the rule of a single emperor.

The dual monarchy was abolished immediately after the end of World War I, and Hungary became a republic. But not for long. As late as 1920, the Hungarians restored the monarchy. However, the head of the reborn kingdom was not a descendant of the Habsburgs, but the aristocrat Miklós Horthy. In the 1930s, he supported Hitler and made Hungary an ally of Nazi Germany.

Soon after the end of World War II, the Communist Party came to power. The Hungarian People's Republic (HPR) lasted until 1989, when democratic elections were held. In 2004, Hungary joined the European Union.

Hungary borders Slovakia to the north, Romania to the southeast, Ukraine to the northeast, Serbia to the south, Croatia to the southwest, Slovenia to the west, and Austria to the northwest. Most of the country lies on the Pannonian Plain.

The Danube, Europe's second-largest river by drainage volume, crosses Hungary from north to south. All the country's rivers belong to the Danube basin. Hungary has three major lakes. The largest freshwater lake in Central Europe is Lake Balaton, an important international tourist destination and also known as the Hungarian Sea. Nearby is Europe's largest thermal lake, Lake Hévíz, which boasts a balneological mud spa and Lake Fertő, with an area of ​​approximately 315 square kilometers.

The country is among the top five countries richest in thermal waters.

Hungary is a country with deeply rooted cultural traditions. The origins of Hungarian culture coincide with the conversion of the Hungarian people to Christianity in the late 10th century. During the reign of King Stephen I (1000–1038), the state and society were restructured along Western European lines, the remnants of old traditions were eradicated, and any influence of Eastern culture was eliminated.

Latin, used by the Roman Catholic Church, became the "official" language of Hungary. This meant, especially in the Middle Ages, that the vast majority of chroniclers, scholars, and educators were priests.

During the Renaissance, Italian scholars and artists flocked to the court of King Matthias I Corvinus (1458–1490), who patronized the work of humanists. In the 15th–17th centuries, a Hungarian national idea emerged, according to which Hungarians were a "bastion of Western civilization" defending against anti-Christian Turkish imperialism. This idea persisted into the 20th century.

Hungary has a well-developed folk art and crafts. The country's musical treasures include the rhapsodies of Franck Liszt and the operas of Ferenc Erkel, as well as Gypsy and folk music.

Hungarian literature is inseparable from the country's history, and therefore its main components are odes, heroic poems, and realistic stories.

The Hungarian mentality is characterized by polite restraint, prudence, and a leisurely approach to business. Behind the outward isolation of the natives Hungarians have a cheerful and friendly nature. They enjoy large gatherings and celebrations, which are always accompanied by dancing. They are friendly and easygoing. They need to see you a second time to invite you to their home or to a birthday party. Hungarians can address you informally, using a variety of contrite and informal words, even when talking to strangers. They pay attention to detail (sometimes even excessively), want to do everything well, and are truly invested in their work and care about it.

Power

Hungary is a parliamentary republic. The highest organ of state power and popular representation is the unicameral National Assembly (199 members), elected by the people for a four-year term.

The highest representative body is the President, elected by the National Assembly for a five-year term, who exercises representative functions.

The highest organ of state administration is the Government, headed by the Prime Minister, who is approved by Parliament on the proposal of the winning party and is the country's chief executive.

The constitutional oversight body is the Constitutional Court of Hungary.

Economy

Hungary, an open economy, occupies a strategic position in the region and serves as a vital link between eastern and western markets. As a member of the European Union (EU), the country benefits from proximity to the continent's major economic centers and serves as a gateway to the EU single market.

The agricultural sector, which has long dominated the Hungarian economy, accounts for 2.5% of GDP and employs 6% of the workforce (World Bank, latest available data). The country's agricultural land area is 5,278,000 hectares, or approximately 56.7% of its territory. The main crops are grains, fruits, corn, vegetables, and wine. In particular, the main crops are wheat (1 million hectares), corn (1 million hectares), and oilseeds (1 million hectares), primarily sunflower and rapeseed (0.9 million hectares).

Industry accounts for 22.7% of the country's GDP and employs 30% of the workforce. Hungarian industry is highly receptive to foreign investment, and manufacturing almost consistently ranks first in terms of foreign direct investment.

The automotive and electronics industries are the two largest industrial sectors, and manufacturing accounts for approximately 17% of the country's GDP.

The service sector accounts for 62.5% of GDP and employs almost 65% of the workforce. Trade, tourism, and finance account for the largest share of activity and employment in the tertiary sector.

In recent years, the value added generated by the ICT sector has increased by more than one-fifth, reaching USD 20 billion, with the digital economy now accounting for over 20% of Hungary's total gross value added.

The banking sector consists of 39 institutions: 17 commercial banks, 11 specialized credit institutions (mortgage banks, real estate finance companies, development banks, and trade finance banks), 9 branches of foreign banks, and 2 guarantee institutions (the European Banking Federation).

In March 2024, the Hungarian government presented a comprehensive competitiveness strategy for 2024–2030, aimed at stimulating economic growth by improving the country's performance across various sectors. The strategy sets ambitious goals, including achieving 90% of the EU's development level by 2030.

The Hungarian government's strategy prioritizes six key sectors: automotive, food, healthcare, industrial materials, ICT, and creative industries.

In the automotive sector, Hungary aims to become a leader in e-mobility by enhancing the competitiveness of domestic suppliers and creating a robust EV ecosystem. The country has attracted significant investment in vehicle and battery production plants.

For the food industry, food security is key in the face of geopolitical challenges. To achieve this goal, the government is implementing a number of strategies, including protecting domestic companies, promoting Hungarian-made products, developing digital technologies, supporting suppliers in establishing international partnerships, and stimulating exports.

The healthcare industry aims to achieve self-sufficiency in essential equipment by 2030, increasing the share of Hungarian production in domestic healthcare from 15% to 30%.

The industrial materials sector, including chemicals, steel, and plastics, is poised to adopt new technologies while simultaneously transitioning to greener practices and securing critical raw materials.

The ICT sector emphasizes growth in the following areas: artificial intelligence, 5G technologies, software development, and cybersecurity. The strategy strengthens the ICT supply chain through education, training, support for the startup ecosystem, targeted funding, and infrastructure investments.

The creative industries focus on media, design, gaming, and culture. The strategy stimulates innovative content production, digital media development, and export growth, while promoting collaboration between the creative and technology sectors. It also fosters the development of creative start-ups and improves access to international markets, positioning these industries as critical drivers of Hungary's economic development.

This competitiveness strategy covers a wide range of parameters, demonstrating the government's commitment to achieving significant economic progress and positioning Hungary as a key player in the European market.

For many years, Hungary has demonstrated its ability to adapt to global challenges, leveraging its strategic location and developed export-oriented industries to achieve economic stability and growth.

The "Eastern Opening" policy, initiated in the early 2010s, aimed to diversify Hungary's economic ties beyond the European market and establish closer ties with Asian economies to achieve economic balance. Hungary became the first EU country to sign a cooperation agreement with China under the Belt and Road Initiative (BRI). The country has successfully attracted a number of Chinese investments and projects, such as the Budapest-Belgrade railway connecting the capitals of Hungary and Serbia, as well as investments in electric vehicle (EV) production facilities and battery factories.

In the face of changing geopolitical dynamics and evolving global trade patterns, Hungary has significant potential as a gateway to the European market and a hub for supply chain diversification.

Hungary and Russia

Trade and economic cooperation is a key element of bilateral relations.

In accordance with the Agreement on Economic Cooperation signed on February 16, 2005, the Russian-Hungarian Intergovernmental Commission on Economic Cooperation (IGC), established in 1992, operates.

The energy sector remains a strategically important area of bilateral cooperation.

In accordance with the intergovernmental agreement, Concluded in 2014, Rosatom State Corporation is implementing a set of measures to further increase the capacity of the Paks NPP, including the design, construction, and commissioning of two new power units. In 2014, three basic commercial contracts were signed for the construction and operation of reactor units, nuclear fuel supplies, and the subsequent removal of spent nuclear fuel, allowing the practical work on expanding the plant to begin.

In August 2022, the Hungarian State Nuclear Supervision Authority approved the Russian application for a main license. Currently, preparatory excavation work is underway to strengthen the soil and construct anti-seepage protection, and production facilities of the construction and assembly base are being erected—a concrete plant and a reinforcement shop, utilities, administrative and other buildings.

JSC TVEL supplies nuclear fuel to units 1-4 of the Paks NPP under a contract concluded in 1999, with the volume of deliveries in 2022 amounting to 90 million euros. The possibility of further extending the operating life of the existing units of the Paks NPP beyond 2032-2037 is being explored with the participation of the Rosatom State Corporation.

Cooperation in the field of natural gas supplies remains a traditional priority of the bilateral energy dialogue.

Currently, supplies are carried out on the basis of long-term contracts signed on September 27, 2021, valid until 2036, with the possibility of changing the terms after ten years. New contracts for the supply of Russian gas to Hungary between Gazprom Export LLC and the Hungarian electricity company MVM have entered into force.

Russian gas accounts for approximately 80% of the Hungarian market.

Cooperation between Transneft and MOL regarding oil supplies to Hungary and transit through its territory is carried out in accordance with the Agreement on Cooperation in the Operation of Trunk Oil Pipelines dated November 16, 2016. Russian oil accounts for 55% of the Hungarian market.

As part of the Russian-Hungarian project to supply 1,300 passenger railcars to Egypt (the target contract was signed on September 25, 2018, between the Russian-Hungarian consortium Transmashholding-Hungary Invest and Egyptian National Railways), the relevant financing agreement entered into force in 2020, and practical deliveries and commissioning of the rolling stock began.

Business climate

Hungary is a signatory to the WTO Investment Facilitation Agreement for Development.

The country is a participant in the EU initiative to create a European "Single Contact" network, through which existing businesses and potential investors can access comprehensive information on the business and legal environment and connect to the HIPA. In recent years, the government has strengthened relations with investors, signed strategic agreements with key investors, and established a National Competitiveness Council to develop measures to enhance Hungary's economic competitiveness.

Business registration in Hungary is mandatory. Companies must retain a lawyer and register online with the district courts, which act as registration courts. Registration courts are required to process applications for the registration of limited liability companies and joint ventures within 15 business days, but the process is typically completed within three business days.

If the court fails to act within the allotted time, the new company is registered automatically. If a company chooses to use a template for company articles of association, registration can be completed using an expedited procedure in one day. Registration courts provide company information to the Tax Administration (NAV), eliminating the need for separate registration. The court maintains a computerized registry and an electronic filing system, ensuring public access to company information. Foreign individuals and legal entities may establish businesses in Hungary without restrictions.

Investment climate

Hungary's central location in Europe and high-quality infrastructure have made it an attractive destination for foreign direct investment (FDI), which the Hungarian government actively promotes.

Advantages of FDI in Hungary:

• Hungary's geographical location makes it a major gateway to Central and Southern Europe, making the country's market attractive to foreign investors.
• The labor force is highly educated and skilled, with recognized skills in engineering, medicine, and economics.
• Labor is also inexpensive, allowing the country to optimally integrate into the European production chain and be considered an efficient manufacturing hub.
• Hungary continues to be one of the fastest-growing economies in the EU. Its financial system is One of the most developed in the region.
• Hungary's high-quality infrastructure and well-defined regulatory framework create a favorable environment for sustainable growth.
• Hungary's integration into the EU in 2004 strengthened its political and economic stability.

Attracting foreign investment is a priority for the Hungarian government. The following incentives are provided to reform the economy and increase the country's attractiveness:

• improving the administrative structure and reducing bureaucratic red tape;
• simplifying access to construction permits;
• during the EU budget cycle (2021-2027), €52.8 billion will be allocated to productivity, research, development, innovation, infrastructure, and renewable energy;
• to stimulate investment, the corporate income tax rate has been reduced to 9%, and social security contributions to 13%;
• the government offers special incentives for investments exceeding a certain amount (usually over €10 million) for investors creating production facilities, logistics facilities, regional service centers, R&D facilities, bioenergy facilities, or working in the tourism sector.

Business and investment support structures

Hungary has various business and investment support structures that provide entrepreneurs and investors with resources to develop projects, attract investment, and stimulate economic growth. The main ones are:

• Hungarian Investment Promotion Agency (HIPA). Investment Promotion Agency: a one-stop shop for foreign and domestic investors – assistance in site selection, support for incentives, and liaison with government agencies.
• Hungarian Chamber of Commerce and Industry (MKIK). The Hungarian Chamber of Commerce and Industry. The organization's main functions are to represent business interests before the government, provide legal, financial, and management advice, and organize educational, informational, and networking programs.
• Hungarian Export Promotion Agency (HEPA). Provides export support for Hungarian companies and access to international markets, consulting on foreign economic activity, participation in international exhibitions, B2B events and missions, and training programs for companies entering new markets.
• Industrial Development Coordination Agency (IFKA). IFKA supports the economic development of domestic companies in various sectors. The company offers industrial modernization programs, ESG training, and business development, and participates in interregional cooperation in Europe. IFKA primarily serves the manufacturing sector, the automotive industry, and small and medium-sized enterprises that need assistance with energy costs and investments.
• Hungarian Economic Development Agency (MGFÜ). SME Development Agency: manages grant competitions, provides support to small and medium-sized businesses, especially in the regions.
• Hungarian National Association of Enterprise Developers (MVOSZ). An association that provides methodological and consulting support to entrepreneurs, conducts educational programs, and represents the interests of SMEs to the state.
• Young Entrepreneurs Association Hungary (FIVOSZ). Assistance to young entrepreneurs: training programs, support, networking, participation in international initiatives.
• SEED Foundation. Small Enterprise Development Foundation — Research and methodological activities, training, projects to develop an entrepreneurial culture.
• PÁTOSZ - SME Association. Autonomous association of small and medium-sized enterprises, assistance with grants, public procurement, project management support.
• Enterprise Europe Network (Hungary branch). A network promoting international cooperation, assistance with entrepreneurship, finding partners, obtaining EU funding, and consulting on standards.

These structures create a framework for business support and investment, providing access to financing, training, and other resources for business growth and development in Hungary.