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COUNTRY PROFILES


PROFILE

Country Facts

Full Country Name: Republic of Hungary
Area: 93,030 sq km (35,920sq miles)
Population: 9,965,000 (July 2011)
Capital City: Budapest (population: 2 million)
Languages: Hungarian 98.2%, other 1.8%
Religion(s): Roman Catholic 67.5%, Calvinist 20%, Lutheran 5%, Jewish 5%, atheist and other 2.5%
Currency: Hungarian Forint (HUF)
Major political parties:
Governing majority:

-- FIDESZ – Hungarian Civic Alliance (FIDESZ-MPSZ)

-- Christian Democratic Party (KDNP)

Opposition:

Hungarian Socialist Party (MSZP)

-- The Movement for Better Hungary (JOBBIK)

Politics Can Be Different (LMP)

President: Mr Pál Schmitt (since 6 August 2010)
Prime Minister: Mr Viktor Orbán (since 29 May 2010)
Membership of international groupings/organisations: Australia Group (AG), Bank of International Settlements (BIS), European Council (EC), Central European Initiative (CEI), CERN, Euro-Atlantic Partnership Council (EAPC), European Bank for Reconstruction and Development (EBRD), European Investment Bank (EIB), European Organisation for Nuclear Research (CERN), European Space Agency (ESA), European Union (EU), Food and Agriculture Organisation of the United Nations (FAO), Group of 9 (G9), International Atomic Energy Agency (IAEA), International Bank for Reconstruction and Development (IBRD), International Chamber of Commerce (ICC), International Civil Aviation Organisation (ICAO), International Criminal Court (ICCt), International Criminal Police Organisation (Interpol), International Development Association (IDA), International Energy Agency (IEA), International Federation of Red Cross and Red Crescent Societies (IFRCS), International Finance Corporation (IFC), International Labour Organisation (ILO), International Maritime Organisation (IMO), International Mobile Satellite Organisation (IMSO), International Monetary Fund (IMF), International Olympic Committee (IOC), International Organisation for Migration (IOM), International Organisation for Standardisation (ISO), International Red Cross and Red Crescent Movement (ICRM), International Telecommunication Union (ITU), International Telecommunications Satellite Organisation (ITSO), International Trade Union Confederation (ITUC), Inter-Parliamentary Union (IPU), Multilateral Investment Guarantee Agency (MIGA), Non-Aligned Movement (NAM - guest), North Atlantic Treaty Organisation (NATO), Nuclear Energy Agency (NEA), Nuclear Suppliers Group (NSG), Organisation internationale de la Francophonie (OIF – observer), Organisation for Economic Cooperation and Development (OECD), Organisation for Co-operation and Security in Europe (OSCE), Organisation for the Prohibition of Chemical Weapons (OPCW), Organisation of American States (OAS - observer), Permanent Court of Arbitration (PCA), Schengen Convention, Southeast European Cooperative Initiative (SECI), United Nations (UN), United Nations Conference on Trade and Development (UNCTAD), United Nations Educational, Scientific and Cultural Organisation (UNESCO), United Nations High Commissioner for Refugees (UNHCR), United Nations Industrial Development Organisation (UNIDO), Universal Postal Union (UPU), Western European Union (WEU - associate), World Confederation of Labour (WCL), World Customs Organisation (WCO), World Federation of Trade Unions (WFTU), World Health Organisation (WHO), World Intellectual Property Organisation (WIPO), World Meteorological Organisation (WMO), World Tourism Organisation (UNWTO), World Trade Organisation (WTO), Visegrad-4 Group (V4).

Hungary is a democratic republic. It became a member of NATO on 12 March 1999.
It joined the European Union on 1 May 2004.

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ECONOMY

Basic Economic Facts

GDP (Market Exchange Rate): US$125.7bn (2009 est)
GDP (Purchasing Power Parity): US$187.6bn (2010 est)
GDP per head (Market Exchange Rate): US$14,094 (2007)
GDP per head (Purchasing Power Parity): US$18,800 (2010 est)
Major Industries: Metallurgy, construction materials, processed foods, textiles, chemicals (especially pharmaceuticals), motor vehicles, logistics, and business services centres
EU share in foreign trade: 77% (exports); 68% (imports).
Other major trading partners: USA, Russia, China
Hungary has a small and open economy, and therefore the country is vulnerable to developments in the external environment. In 2010 GDP growth reached 1.1%. In 2011 the growth was 1.8%. In terms of budget deficit, Hungary performed well in a European comparison in 2011 with a figure slightly under 3%. Unemployment peaked above 11% in 2010 and reduced slightly to 10.8% in 2011. Inflation was 3.9% in 2011. The government secured an IMF loan in November 2008 to prevent speculators making a run on the forint; the agreement expired in October 2010. Now another programme is on the horizon. The details of the prospective agreement with the related conditions are under discussion with the international institutions. The first loan was necessary to stabilise the country’s economy, but resulted in high levels of indebtedness (government debt increased to 80% of GDP in 2009). The next loan aims to restore the market’s confidence after several controversial step of the government. Hungary plans to join the Euro not earlier than the end of this decade

The government’s economic policy is based on two pillars: increasing competitiveness and the levels of employment. Objectives include creating one million new jobs in ten years, mainly in the following sectors: construction industry, agriculture, and tourism. Generating economic growth, stable fiscal policy, simplified tax system, improved education, research and innovation, support of SMEs, reduced layers of bureaucracy, and consumer protection are among the aims.

Exports have steadily risen since 1993. Almost 80% of foreign trade flow to EU countries, especially to large Old Member States, and regional (V4) partners are also important. Main foreign trade partners of Hungary include Germany (25.7%), Italy (5.7 %), the United Kingdom (5.4%), France (5.4 %), Romania (5.3%), Slovakia (5%), Poland (3.7%) and Czech Republic (3.2%).

Nearly 90% of GDP is now generated by the private sector compared with just 10% in 1990. Hungary is concentrating on structural investment, and has a higher skills-base than most of its neighbours; over 75% of trade is now with the European Union. In terms of business, Hungary has many advantages but lack of transparency and over-regulation are some of the problems doing business in the country.

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HISTORY

Hungarians are deeply attached to their national, cultural and linguistic heritage. Migration rates, within Hungary as well as overseas, are low.

Longer Historical Perspective

The ancestors of ethnic Hungarians were the Magyar tribes, who moved into the Carpathian Basin in 896, conquering the people already in the region. Hungary became a Christian Kingdom under St Stephen in the year 1000. Much of Hungary fell under Turkish domination from the early 16th until the late 17th century. Thereafter, the country came under Habsburg rule. This lasted until 1918 – although from the establishment of the dual Austrian-Hungarian monarchy in 1867 onwards, Hungary enjoyed broad autonomy and a golden period.

Recent History

Hungary was on the losing side of both World Wars. At the end of the first, Hungary lost two-thirds of its territory under the 1920 Treaty of Trianon, leaving large numbers of ethnic Hungarians in Romania (c. 1.5 million), Slovakia (c. 550,000), Serbia and Montenegro (c. 350,000) and the Ukraine (c. 150,000). After the Second World War, the Communists gained complete control by 1948, despite the low level of support for Communism in Hungary. Stalin's death and Khrushchev's denunciation of him brought about a crisis in Hungary and led to the 1956 Uprising, which was suppressed by Soviet troops. After an initial period of oppression, from 1961 the new Communist leader, Kadar, instituted a platform of national reconciliation and then in 1968 introduced new radical economic reforms unparalleled in any other communist country. These led to a gradual improvement in living standards, a relaxation of the domestic atmosphere and improved relations with the West. But there was no parallel relaxation of the Communist grip on political life.

Post-1989

Hungary played a key role in the fall of Communism in 1989 by opening its borders allowing East Germans to enter Austria. Since then its transition to parliamentary democracy has run smoothly. The first democratic elections after the collapse of communism were held in March/April 1990. Subsequent elections were held in 1994, 1998, 2002, 2006 and 2010.

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INTERNATIONAL RELATIONS

Relations with the UK

Hungary plays an active role in overseas peace-keeping and security operations, primarily in the Balkans but also in Afghanistan, where they have troops and a Provincial Reconstruction Team (PRT), and Iraq. Hungary has a strong interest in the social and cultural well-being of ethnic Hungarians in neighbouring countries (i.e. in territory that was part of Hungary before the country was reduced in size by roughly two-thirds at the Treaty of Trianon, 1920).

There is a healthy trade and investment relationship and British tourists frequently visit. Hungarians work and study in the UK, but not in anything like the numbers of other Central European countries. The UK and Hungarian governments discuss a wide range of issues - from EU Justice and Home Affairs policy, agriculture, climate change and energy, to foreign policy issues such as EU enlargement, Russia and developments in the Balkans.


Recent Senior Visits


Inward

-- HE Mr Pál Schmitt, President of the Republic of Hungary, January 2011

-- HE Mr Viktor Orbán, Prime Minister, December 2010

-- HE Mr János Martonyi, Foreign Minister, December 2010

-- HE Mr Sándor Fazekas, Minister for Rural Development, November 2010

-- HE Mr Tibor Navracsics, Deputy Prime Minister, September 2010

-- HE Mr Péter Balázs, Foreign Minister, September & October 2009

-- HE Mr Gordon Bajnai, Prime Minister, October & December 2009

-- HE Mr Ferenc Gyurcsány, Prime Minister, March 2009

Outward

-- David Jones MP, Parliamentary Under Secretary of State for Wales, June 2011

-- Jeremy Browne MP, Minister of State, Foreign and Commonwealth Office, June 2011

-- Caroline Spelman MP, Secretary of State for Environment, Food and Rural Affairs, May 2011

-- Robert Neill MP, Permanent Under Secretary of State, Department for Communities and Local Government, May 2011

-- Simon Fraser, Permanent Under Secretary of State and Head of Diplomatic Service, Foreign and Commonwealth Office, May 2011

-- Charles Hendry MP, Minister of State for Energy & Climate Change, May 2011

-- Rt Hon David Willetts MP, Minister of State for Universities & Science (attending Cabinet), Department for Business Innovation and Skills, April 2011

-- Rt Hon George Osborne MP, Chancellor of the Exchequer, April 2011

-- Mark Hoban MP, Financial Secretary to Treasury, April 2011

-- Anne Milton MP, Parliamentary Under Secretary of State for Public Health, April 2011

-- Chris Huhne MP, Secretary of State for Energy and Climate Change, March 2011

-- Caroline Spelman MP, Secretary of State for Environment, Food and Rural Affairs, March 2011

-- Rt Hon William Hague MP, Secretary of State for Foreign and Commonwealth Affairs, March 2011

-- Gerald Howarth MP, Minister for International Security Strategy, Ministry of Defence, February 2011

-- Hugh Robertson MP, Minister for Sports and the Olympics, Department for Culture, Media and Sport, February 2011

-- Rt Hon Theresa Villiers MP, Minister of State for Transport, Department for Transport, February 2011

-- Rt Hon Kenneth Clarke QC MP, Lord Chancellor and Secretary of State for Justice, January 2011

-- Rt Hon Theresa May MP, Home Secretary and Minister for Women and Equality, January 2011

-- Rt Hon Chris Grayling MP, Minister for Employment, Department for Work and Pensions, January 2011

-- Edward Davey MP, Minister for Employment Relations, Consumer and Postal Affairs, Department for Business Innovation and Skills, January 2011

-- David Lidington MP, Minister of State responsible for EU issues and NATO, Foreign and Commonwealth Office, January 2011

-- Mark Hoban MP, Financial Secretary to Treasury, December 2010

-- Simon Fraser, Permanent Under Secretary of State and Head of Diplomatic Service, Foreign and Commonwealth Office, November 2010

-- European Scrutiny Committee, House of Commons, November 2010

-- Rt Hon John Bercow MP, Speaker of the House of Commons, November 2010

-- Rt Hon and Lord Mayor Michael David Bear, City of London, November 2010
David Lidington, Minister for Europe, July 2010

-- HRH The Prince of Wales and HRH The Duchess of Cornwall, March 2010

-- Rt Hon Baroness Hayman, The Lord Speaker, June 2009

-- Sir Andrew Cahn, Chief Executive of UKTI, February 2009

-- HRH The Queen visited Hungary in May 1993

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GEOGRAPHY

Hungary is a landlocked state in Central Europe, bordering Austria (366km), Croatia (329km), Romania (443km), Serbia (166km), Slovakia (676km), Slovenia (102km) and Ukraine (103km). It is mostly flat, with low mountains in the north and north-east and to the north-west of Lake Balaton. Hungary has some limited natural resources (bauxite, coal, and natural gas), as well as fertile soils and arable land. The north-south flowing Duna (Danube) and Tisza Rivers divide the country into three large regions and Hungary is divided administratively into 19 counties, 23 urban counties and the capital.

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TRADE AND INVESTMENT

Trade and Investment with the UK

In 2010 combined trade in goods amounted to over GBP 4 billion. While this overall figure is expected to stagnate in 2011, interim data suggest close to 10% increase in UK export to Hungary for 2011, a significant achievement considering the current European economic climate.

The UK remains a major investor in Hungary while the thriving local British Chamber of Commerce (http://www.bcch.com)has around 200 member companies.

Main products imported into the UK include telecommunication appliances, general industrial and power generating machinery and road vehicles, while medicinal and pharmaceutical products, IT and electrical components and various machinery products provide the bulk of UK export to Hungary.

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POLITICS

Recent Political Developments

In April 2010 the Opposition centre-right Fidesz party - in alliance with the Christian Democrats (KDNP) - won a landslide electoral victory with 53% of the vote. Fidesz-KDNP scored another sweeping victory in the October 2010 local elections. The Hungarian Socialists Party (MSzP) led by Attila Mesterházy and with 19% of the vote (59 out of 386; 15%) form a weak main opposition. Since then the Socialists have lost 10 MPs who followed former Prime Minister Ferenc Gyurcsány when he left the MSzP to found his new party, the Democratic Coalition, in October 2011. The extreme right-wing Jobbik (Movement for a Better Hungary) party led by Gábor Vona won 17% of the vote (47 seats; 12%) and new leftist-green party “Politics Can Be Different” (LMP) won 7% (16 seats; 4%).

The governing Fidesz - KDNP alliance currently holds 68% of seats in Parliament (263 out of 386 seats), which enables them to pass or amend key laws which require a 2/3 parliamentary majority, has set out to reshape Hungary’s political and legal landscape with great resolve, pushing dozens of new and amended pieces of legislation through Parliament at great speed.

In April 2011 Parliament adopted a new Constitution (now called Fundamental Law) which came into force on 1 January 2012. Linked to the new Constitution, Parliament also passed a package of legislation affecting the judiciary system, the electoral system, the status of churches, the Central Bank and a wide range of other key areas. Prime Minister Orbán has described these changes as part of Fidesz-KDNP’s efforts to sweep away the “last vestiges of communism” and to reassert the basic values of “family, order, home, work and health. But the government has come under strong criticism both at home and abroad. Criticism is directed partly at various pieces of new legislation – the European Commission has already launched infringement proceedings on Hungary over three new laws; partly at the cumulative effect of putting pro-government loyalists in key positions for long periods, tying the hands of future governments on crucial economic decisions and passing legislation without substantial consultation with other political parties and social partners.

Prime Minister: Mr Viktor ORBÁN
Deputy Prime Minister & Minister of Public Administration and Justice: Mr Tibor NAVRACSICS
General Deputy Prime Minister: Mr Zsolt SEMJÉN
Minister of Foreign Affairs: Mr János MARTONYI
Minister of Regional Development: Mr Sándor FAZEKAS
Minister of National Resources: Mr Miklós RÉTHELYI
Minister of National Development: Mrs Zsuzsanna NÉMETHEGI
Minister of National Economy: Mr György MATOLCSY
Minister of Interior: Mr Sándor PINTÉR
Minister of Defence: Mr Csaba HENDE

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Last Updated: January 2012

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