German economy in big trouble, Hungary could be the winner

The German economy is facing more and more problems. In the long term, Hungary could be one of the winners. If the German economy can’t handle the challenge of cutting off from Russian gas, the challenge of going green could cause problems.

Germany in trouble

Analysts say Europe is lagging behind in the electric car revolution. The German economy has been struggling for months, with dismal figures since the end of last year. Inflation has fallen and the long-term outlook is also worrying.

Germany is suffering from a cut-off from cheap Russian energy. Europe’s largest economy risks losing the international market advantage it has built up over the past decades. A sign of this is that German business leaders are criticising official economic policy and outsourcing production. At the end of August, 52% of German businesses said that the switch to clean energy would have a negative impact on their competitiveness.

“We used to say that if something was high-tech, it must have come from Germany, but this is no longer true,” said Péter Virovácz, senior analyst at ING Bank. In the past, the strength of the German economy was exports, but that is no longer true. Covid, the energy crisis and inflation have caused problems here too. Chinese buyers are also buying their own products rather than German ones. In addition, the analyst says, there is a lack of domestic demand stimulation.

Hungary could be a winner

The problems of the German economy also affect Hungary: in 2022, a quarter of all Hungarian exports went to Germany. German companies are investing in America and Central and Eastern Europe, which could be beneficial for Hungary.

“The Hungarian economy could also be a winner of this weakness, if we look at the car industry alone, the production volume of German car manufacturers in Hungary is increasing,” Zoltán Török, senior analyst at Raiffeisen Bank, told vg.hu. BMW will start production in Hungary from 2025, which could reinforce this.