Business

Hungary and Ukraine propose EUR 1 billion EU-funded infrastructure plan to boost connectivity

Hungary and Ukraine have submitted an ambitious EUR 1 billion joint infrastructure proposal to the European Union. The strategic initiative, which focuses on improving cross-border transport links, includes plans for new motorways, upgraded border crossings and the construction of a modern bridge over the Tisza River.

The project aims to strengthen economic ties between Hungary and Ukraine and their integration into wider European networks by streamlining the movement of goods and improving regional connectivity. At the core of this initiative is a commitment to create seamless transport corridors between Hungary and Ukraine.

According to Magyar Építők, the plan outlines key infrastructure upgrades that promise to reduce bottlenecks and facilitate a more efficient flow of goods and people. This important step not only strengthens bilateral relations but also contributes to the EU’s vision of a more connected Europe.

New motorways and border crossings

Two major motorway projects will transform regional connectivity. One link will connect the cities of Záhony in Hungary and Csap in Ukraine, including the construction of a state-of-the-art bridge over the Tisza River. This new infrastructure will play a key role in improving cross-border trade and mobility.

Another cornerstone of the proposal is the redevelopment of the Lonya-Haranglab border crossing, which will soon accommodate freight traffic. This development is expected to improve traffic flow and reduce delays by diverting heavy vehicles from the congested Záhony crossing.

The Beregsurány-Asztély border crossing is undergoing a major upgrade to meet the demands of increased cross-border traffic. On the Ukrainian side, a major renovation and capacity expansion is planned to triple the crossing’s throughput capacity by 2026. In particular, the site has already begun to handle empty lorry traffic, marking the first phase of a comprehensive development strategy. This progress will establish Beregsurány as a key transport hub for the region.

Plans for a new border crossing between Nagyhódos in Hungary and Nagypalád in Ukraine signal further investment in regional mobility. This will be the sixth operational crossing between the two countries. Together with improvements at Asztély and Harangláb, these developments aim to reduce congestion at existing border crossings, particularly at the busy Záhony crossing.

Long-term plans and regional impact

Hungary’s ongoing commitment to expanding its motorway network reflects its broader vision of improved connectivity with Ukraine. Notable projects include the extension of the M3 motorway from Vásárosnamény to Beregsurány and the construction of the M34 expressway towards Záhony. These investments are crucial to strengthening the infrastructure that underpins cross-border economic cooperation.

This comprehensive development programme is about more than just improving transport infrastructure. It aims to increase the competitiveness of the entire region By improving the movement of goods and enhancing road safety. The resulting economic growth will strengthen the position of Hungary and Ukraine within the European Union and its economic networks.

The programme also reflects a forward-looking approach to regional integration. It emphasises the importance of strategic partnerships and the role of robust infrastructure in promoting economic resilience. Improved connectivity will not only benefit Hungary and Ukraine, but also reinforce the EU’s commitment to building a more united and economically vibrant Europe.

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December 5, 2024

Ambitious plans: Uzbek carrier plans to launch a Hungarian airline

Uzbekistan-based cargo airline My Freighter is charting ambitious plans to expand its operations internationally, including establishing a new airline in Hungary. This move, alongside securing another air operator’s certificate (AOC) in Saudi Arabia, was announced by Abdulaziz Abdurakhmanov, the founder and CEO of Centrum Holding, the airline’s parent company, during the Central Asia Air Cargo Summit 2024.

Hungary as a strategic hub for the Uzbek airline

The Hungarian AOC is a cornerstone of My Freighter’s strategy to strengthen its presence in Europe while reaching markets in South and North America, the Middle East, and the Far East, AIRportal.hu wrote based on Ch-aviation’s report. “These new cargo airlines will allow us to expand our network globally,” Abdurakhmanov stated. The company also plans to establish a new base in Navoi, Uzbekistan, with regular cargo routes to Liège (Belgium) and Ostrava (Czechia).

The airline’s plans extend beyond Europe. My Freighter is targeting entry into Singapore, Malaysia, and Pacific markets, and launching regular flights to Pakistan and India.

my freighter uzbekistan airline — An aircraft of Uzbek airline My Freighter. Photo: My Freighter

Currently, My Freighter operates a fleet of five Boeing 767-300ER freighters, which includes one BDSF and four BCF models. The fleet is set to grow significantly, with five more aircraft expected in 2025 and a target of 20 freighters by 2026.

Uzbek My Freighter building on existing connections

My Freighter already has a presence in Hungary, operating charter cargo flights from Hong Kong to Budapest with a stopover in Uzbekistan. The addition of a dedicated Hungarian AOC would deepen these ties and enhance the airline’s ability to serve European markets more effectively.

In addition to cargo operations, Centrum Holding oversees Centrum Air, a passenger airline that currently operates four planes, including Airbus A320-200s and A321neos. While it does not yet have a separate AOC, Centrum Air could see further development alongside My Freighter’s growth.

Emerging competition: Hungary Airlines

While My Freighter focuses on cargo, another player is entering the Hungarian aviation market. As we reported earlier, Hungary Airlines, backed by Chinese investment, recently signed a deal with Boeing to acquire 100 Boeing 737 MAX aircraft. The airline aims to establish routes between China and Central Eastern Europe, using Budapest as its European hub.

The head of the Relations Department of HEPA (Hungarian Export Promotion Agency) said that Hungary Airlines aims to become a global trademark and provide sustainable and effective air travel services. Moreover, they would like to strengthen the relationship between China and Hungary. Based on the article published by Új Szemle, Hungary Airlines plans to launch its first flight to Hong Kong. However, it is not specified whether that will be a cargo or a passenger flight.

Though distinct in their missions, the simultaneous emergence of My Freighter’s Hungarian venture and Hungary Airlines reflects the country’s growing importance as a hub for aviation in the region. These developments could mark a significant shift in Hungary’s role in international air transport.

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December 5, 2024

Hungarian Development Bank launches EUR 84 million EU-funded credit scheme for SME digitalisation

MBH Magyar Bank Holding Hungarian Bank credit scheme

The Hungarian Development Bank (MFB) announced the launch on Thursday of a HUF 34.7bn (EUR 84 million), European Union-funded credit scheme to support digitalisation at microbusinesses and SMEs.

Launch of an EU-funded credit scheme announced

MFB said HUF 27.8bn of the zero-interest credit would be for project financing of between HUF 3m and HUF 20m, while HUF 7.0bn would be for loans of between HUF 20m and HUF 200m. Total outlays for businesses undertaking projects in the capital are capped at HUF 5.1bn.

The credit is available at the MFB Pont Plusz network and designated branches of MBH Bank and Gránit Bank.

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December 5, 2024

Hungarian central bank holds rates as majority cites geopolitical and market risks

Hungarian forint national bank central bank governor Matolcsy historic lows

Mihály Patai, a deputy governor of the National Bank of Hungary (NBH), was the only member of the central bank’s Monetary Council to vote for a rate cut at a monthly policy meeting in November, the minutes of the meeting released on Wednesday show.

Eight of the Council’s nine members voted to keep the base rate on hold at 6.50pc at the meeting on November 19. Patai voted for a 25bp cut.

“Decision makers underlined that geopolitical tensions, volatile financial market developments and the risks to the outlook for inflation warranted a further pause in cutting interest rates,” according to the minutes.

Members stressed that sentiment on international financial markets had been volatile since the October policy meeting, and risk aversion towards emerging markets had increased in parallel with the appreciation of the dollar.

Members were in agreement that financial market stability remained “a key factor” in terms of price stability.

Discussing domestic inflation developments, the Council concluded that the consumer price index had risen slightly but remained below expectations in October, reflecting declining price growth in market services.

Based on real economic developments, the inflation outlook and the assessment of the risk environment, members concluded that subdued economic growth in Hungary was largely fueled by such factors as weak agricultural performance or subdued external activity which fell outside the scope of monetary policy.

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December 4, 2024

Campaign promotes Hungarian pork

A campaign to promote the consumption of locally raised pork is taking place ahead of the holidays.

At a press conference in Budapest on Tuesday, Zsolt Feldman, the state secretary for agriculture and rural development, acknowledged that pork was a staple of Hungarian cuisine, but said the annual campaign aimed to present something new to consumers.

Gergely Giczi, the deputy head of Agrarmarketing Centrum, said the campaign had been organized every year since 2021. He added that per capita Hungarian pork consumption has climbed by almost 10kg to 30kg a year over the past decade.

Tamás Eder, the head of the Hungarian Meat Industry Federation, said domestic hog stock had climbed by close to 100,000 to 2,600,000 over the past year, even as stock across Europe stagnated. He added that imports from Poland, Germany, Austria, and Spain weighed on the sector’s outlook.

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December 4, 2024

The future is coming: Budapest Airport’s overhaul begins in 2025!

Budapest Airport travel tourism TUI (Copy)

In June 2024, Budapest Airport embarked on a transformative new chapter by becoming a majority Hungarian-owned company. This landmark change was made possible through a partnership between Corvinus Zrt. and Vinci Airports, with a clear focus on improving passenger traffic and infrastructure.

According to Index, the new ownership team is committed to modernising and expanding the airport, with Terminal 3 at the heart of their ambitious vision. It is important to note that the scope of these improvements extends beyond the terminal itself, as public and private investors collaborate to enhance the surrounding transport infrastructure.

budapest airport shuttle bus 100e — Photo: BKK

Terminal 3

The cornerstone of Budapest Airport’s development plan is Terminal 3, which will enter a critical phase in the second half of 2025. According to Máté Lóga, President of Budapest Airport Ltd., the design phase is nearing completion, paving the way for construction to begin in early 2025. This multi-year endeavour is set to become one of the most significant infrastructure projects in Central Europe.

Terminal 3 is being designed to meet growing passenger demand, which is projected to reach 20–30 million annually within the next decade. By employing the latest technologies and sustainable solutions, the new terminal aims to provide an efficient, comfortable, and environmentally friendly travel experience.

A focus on seamless connectivity between transport modes

The airport’s transformation is not limited to its terminals. The Hungarian government is actively promoting the development of the surrounding transport infrastructure, including the expansion of motorway networks and rail connections. Intermodality, the seamless integration of different modes of transport, remains a top priority. These enhancements are expected to streamline travel between the airport and Budapest, increasing its attractiveness and boosting passenger numbers.

Budapest Airport cargo airport — Photo: FB/Budapest Airport

In addition to Terminal 3, existing airport services are undergoing a technology-driven upgrade. Innovations such as automated border control gates and improved check-in counters are set to simplify passenger processes while increasing efficiency. These advancements not only enhance the user experience but also optimise the airport’s overall capacity.

The ambitious development programme is expected to yield returns sooner than initially anticipated. Máté Lóga suggests that the original 16.5-year payback period could be significantly shortened. Investor confidence is growing, underscoring the economic potential of the airport as passenger and freight volumes exceed forecasts.

Global expertise and local impact

According to Index, the development of Budapest Airport is being driven by a collaboration of world-class international and local expertise. Vinci Airports, with its extensive experience managing over 70 airports worldwide, is playing a key role in realising this vision. The partnership aims to position Budapest Airport as a premier travel hub, capable of meeting the growing demands of the region with excellence.

The acquisition of Budapest Airport marks a turning point for Hungarian aviation. From the construction of Terminal 3 to the modernisation of transport links and services, these investments promise to boost both capacity and the country’s economic prospects. The coming years will see this bold vision come to life, cementing Budapest Airport’s role as the gateway to Central Europe.

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December 3, 2024

Solution to problems caused by US sanctions on Gazprombank close, says Hungarian minister

Sergey Lavrov and Péter Szijjártó Russian energy

Solutions to manage the problems caused by US sanctions against Russia’s Gazprombank imposed by the United States have been adopted in three of four instances affecting Hungary, Minister of Foreign Affairs and Trade Peter Szijjarto told lawmakers on Tuesday.

At the parliamentary hearing, opposition MEPs were mainly interested in why the Hungarian government is increasing its purchases of Russian energy and why it is not trying to replace its dependence on Russia with green energy instead. Several opposition members also asked whether the natural charging of battery power plants would pay off in Hungary in the long run. There was also criticism that foreign trade is negative, and according to the latest KSH data, the Hungarian economy is in massive recession.

Giving testimony before parliament’s economy committee, Szijjártó said the legal constructions devised to resolve the matter, reached at meetings in Moscow a day earlier, would ensure Hungary’s energy supply. Related article: Russian Foreign Minister Lavrov again received the Hungarian Foreign Minister in Moscow

He added that the sanctions had affected several European countries that made payments for their Russian energy through Gazprombank, and coordination among them was ongoing. Related article – Hungarian minister: We are working with the Russians on a solution to avoid US sanctions

He said those countries happen to be sympathisers of President-elect Donald Trump. He added that Russian banks that manage payments for uranium exports were granted exceptions to the sanctions.

He noted last year that the US was the biggest buyer of Russian uranium.

Szijjártó said Hungary rejected any initiative that attempted to muddle energy supply and economic cooperation with ideological or political matters. He added that, given the existing infrastructure, Hungary had not been made a better offer than that for its gas from Russia.

Szijjártó pointed to efforts to diversify Hungary’s energy supply, including the start of deliveries of Azeri and Turkish gas and talks on purchasing Qatari LNG for the period after 2027. He added that the European Commission had been unwilling to provide financial support for the infrastructure necessary to diversify the energy supply in the region.

Addressing electromobility, Szijjártó augured a rebound in demand for EVs after a temporary downturn and said EV industry investments that had been scrapped were in countries where they had not even started, while projects in Hungary were well underway.

He added that state support for such investments would have to be repaid, with interest, if conditions were not met.

read also: Slovak interior minister: Possible Hungarian terror attack against the Friendship crude oil pipeline, details HERE

December 3, 2024

Shocking: Renting in Hungary’s cities leaves workers empty-handed!

From 2025, the minimum wage in Hungary will increase by 9%, resulting in a net monthly income of HUF 193,300 (EUR 466). However, this remains far from sufficient to cover the cost of renting an independent apartment in Budapest or other urban centres.

In addition to housing, basic expenses such as food, utilities, and transport place a significant strain on budgets. Consequently, most minimum wage earners are left with options such as room rentals or living arrangements that involve substantial compromises.

Housing Renting Rental Market — Source: Pixabay

Renting in Budapest and minimum wages

Renting a single room in Budapest currently costs between HUF 45,000 (EUR 108) and HUF 130,000 (EUR 313), with the average hovering around HUF 98,000 before utilities are added. According to Pénzcentrum, with a budget of HUF 97,000 (EUR 233), renting a room is nearly the only viable option, while independent living is restricted to lower-quality or peripheral micro-rentals. In smaller cities, the situation is slightly better; modest apartments can be found within this price range, though they still require considerable compromises.

Sharing the cost of renting an apartment is becoming increasingly common. For instance, a two-room apartment in the outer districts of Budapest can cost around HUF 200,000 (EUR 482) per month, meaning two people could pay less than HUF 100,000 (EUR 241) each. However, this arrangement is far less affordable in the inner districts or more desirable neighbourhoods, where similar apartments command significantly higher rents.

Couples earning the minimum wage may find larger apartments slightly more attainable, though they still need to compromise on size or location in Budapest. Two people earning around HUF 190,000 (EUR 458) each can primarily afford to rent on the outskirts of the capital. In rural areas, two-room flats are more accessible and provide a slightly easier route to decent housing.

Those earning the guaranteed minimum wage (requiring at least secondary education) of HUF 232,000 (EUR 559) net have slightly more options, though these are still limited. In Budapest, the average monthly rent for a one-bedroom apartment is approximately HUF 178,000 (EUR 429), leaving just enough for utilities. In smaller cities, the situation improves somewhat: one-bedroom flats in regional centres often rent for around HUF 126,000 (EUR 303), allowing greater financial flexibility.

Rent prices in Budapest reached a psychological barrier Budapest's rental market — Source: depositphotos.com

Trends in the rental market

Rental prices are expected to rise by 5–10% in the coming year, further restricting options for those on minimum or guaranteed minimum wages. The supply of affordable housing on the national rental market is already minimal, with most options concentrated in Budapest and county cities. While smaller towns offer lower prices, the limited availability of housing presents a significant challenge.

Most tenants seek furnished, equipped apartments of at least 40 square metres. Flats in the HUF 200,000 (EUR 482) range remain the most popular at the upper end of the market, while those on tighter budgets are largely limited to renting rooms or shared flats.

Despite increases in minimum and guaranteed minimum wages, the housing affordability crisis remains unresolved. Rising rents and limited supply will continue to burden low-income earners, particularly in Budapest and larger cities. For many, shared accommodation or cheaper rentals in smaller municipalities will remain the only practical solutions.

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December 3, 2024

Weak car and battery factories, big drought: the Hungarian economy in technical recession

Hungary’s GDP contracted 0.7pc year-on-year in the third quarter, adjusted for seasonal and calendar year effects, a second reading of data released by the Central Statistics Office (KSH) on Tuesday shows.

According to KSH, without adjustments, GDP fell 0.8pc.

Services’ performance and the balance of product taxes and subsidies mitigated the decline by 0.8pp and 0.3pp, respectively. Industry contributed 1.1pp, agriculture 0.6pp, and the construction sector 0.2pp to the decline.

On the consumption side, investments contributed 2.1pp and the trade balance 0.9pp to the decline. Final consumption mitigated the drop by 2.1pp.

In a quarter-on-quarter comparison, GDP dropped a seasonally- and calendar year-adjusted 0.7pc.

In Q1-Q3, GDP rose an unadjusted 0.6pc and an adjusted 0.7pc.

Production approach

The industry reduced its performance by 4.4%, while manufacturing grew by 6.2% compared to the same period of the previous year. Among manufacturing branches, the largest contributors to the decrease were the manufacture of motor vehicles, trailers and semi-trailers and the manufacture of electrical equipment, while the manufacture of rubber and plastic products and the manufacture of food products, beverages and tobacco products slowed the fall in industry the most. The value added of construction was 4.0% and that of agriculture (as a consequence of the drought) 14.9% lower than in the corresponding period of the previous year.

The gross value added of services increased by 1.9% in total. The highest increase (5.9%) occurred in arts, recreation and other service activities. The value added of education was up by 3.8%, that of transportation and storage by 2.8% and the value added of information and communication by 2.6%. The performance of both accommodation and food service activities and financial and insurance activities increased by 2.4%. The value added of human health and social work activities grew by 2.3% and that of real estate activities by 1.2%. The performance of professional, scientific, technical and administrative activities became 0.9%, that of wholesale and retail trade 0.8% and the performance of public administration 0.4% larger.

The 0.8% decrease in gross domestic product in the 3rd quarter of 2024 was reduced by services (by 0.8 percentage point) and the balance of taxes and subsidies on products (by 0.3 percentage point). Industry lowered the performance of the economy by 1.1, agriculture by 0.6 and construction by 0.2 percentage point. Within services, all sections contributed to a similar extent to offsetting the decrease in GDP.

Expenditure approach

The actual final consumption of households was up by 4.2% compared to the same period of the previous year. Household final consumption expenditure, representing the largest proportion of the components of the actual final consumption of households, rose by 4.5%. The (domestic) consumption expenditure of households realised on the territory of Hungary became 4.1% higher. The volume of domestic consumption expenditure increased in all durability groups: by 1.6% in the case of durable goods, by 4.6% for semi-durable goods, by 4.8% in the case of non-durable goods and by 4.0% for services.

The volume of social transfers in kind from the government went up by 3.3%, while that of the actual final consumption of the government diminished by 1.4%. The volume of social transfers in kind from non-profit institutions serving households (NPISHs) grew by 1.2%.

As a result of the above trends, actual final consumption increased by 3.2%.

Gross fixed capital formation fell by 14.0% in the 3rd quarter compared to the corresponding period of the previous year. Both the volume of investments in construction and that of investments in machinery and equipment went down.

Gross capital formation decreased by 4.9% compared to the same period of the previous year.

As a result of the trends of consumption and of capital formation, domestic use as a whole grew by 0.3% in the 3rd quarter.

December 3, 2024

Opinion – The emerging warm Hungarian atom: a glimpse into the future

sz*************@gm***.com” data-hovercard-owner-id=”43″>by Marek Szymkiewicz

The European Union is actively discussing the introduction of small modular nuclear reactors (SMRs) into the grid. In early 2024, the European Commission established the European Industrial Alliance with the objective of developing such power plants and called member states to join the project. There are two reasons behind this: environmental and economic.

From an environmental standpoint, the objective is to achieve carbon neutrality by 2050. At last year’s COP28 UN Climate Change Conference, the vital role of nuclear power in mitigating the carbon footprint was acknowledged, resulting in a plethora of countries declaring their willingness to explore possible ways to implement it. A total of 31 countries have signed a declaration of intent to triple the amount of energy produced by peaceful nuclear power by 2050.

It is similarly crucial to consider the economic necessity of increasing electricity production. For the economy to run successfully, it is essential to attain energy security, i.e. such a state of the electric grid that meets all the necessary energy requirements with reliable and cost-effective resources, thereby facilitating sustainable economic growth. As a consequence of the sanctions imposed by the European Union on Russia, the primary energy supplier, the average European electricity prices have skyrocketed. Prior to the sanctions, the average price was 0.13 €/kWh, but it has since risen to 0.2187, peaking at 0.2401. Hungary is currently regarded as the country with the cheapest electricity in the EU, which provides an obvious competitive advantage over the other countries. Such favorable prices are mainly due to the government’s robust stance to protect its national interests, specifically its well-established trade and energy ties, despite the pressure exerted.

The European Union, particularly Germany, has applied pressure to Hungary. It is noteworthy that Berlin’s political aspirations have resulted in economic and living standard challenges for its citizens. Germany currently has the highest electricity prices in Europe, at 0.3951/kWh, compared to Hungary’s 0.1094, representing a nearly fourfold difference. Cheap energy from Russia has been fundamental to the growth of Europe’s most advanced economy. However, the recent surge in electricity prices is now having a cascading effect across all sectors. The once glorified economy experienced a 0.3% decline in 2023 and has remained stagnant in 2024 with indications of a likely onset of a prolonged recession. Volkswagen is shutting down a plant in its home country for the first time in its history and Thyssenkrupp, a giant of steel production, is reporting losses exceeding 1.4 billion for the second consecutive year. Similar challenges are being faced by numerous other German companies. These developments in the German market are complex and multifaceted, but the rise in electricity prices is undoubtedly a significant contributing factor.

The situation has reached a point where other member countries of the Union are reluctant to supply electricity to Germany, as this would result in higher prices in the supplying country. In the summer of this year, Sweden declined Germany’s request to connect the two countries’ power grids via a 700 MW cable, citing the inefficiency of the latter’s grid as the primary reason. Political aspirations have resulted in an economic downturn.

In light of these events, there is a growing recognition among countries of the potential of nuclear power as a means of mitigating the escalated costs of recent years. At present, the field of small modular reactors (SMRs) is regarded as the most promising avenue of nuclear power plant advancement, as these compact nuclear power plants offer a range of advantageous features:

Transportable
Easier to build
Lower power requirements
Less frequent fuel changes
Safer due to passive safety systems

At present, only two such plants are in operation: one in China (HTR-PM) and one in Russia (KLT-40S). They commenced operation in 2021 and 2020, respectively. Meanwhile, the EU has only recently begun to support SMR research, due to its previous stance on nuclear energy. In 2023, the EU allocated a total development budget of €27 million.

It is noteworthy that this particular type of station is dependent on the utilisation of high-assay low-enriched uranium (HALEU) in order to function effectively. At present, Moscow is the sole current commercial seller. It is also the global leader in power plant construction, with 26 units currently under construction in eight countries (China, Egypt, India, Turkey, Slovakia, Bangladesh, and Iran, as well as Russia itself).

As history repeats itself, calls for sanctions are being heard in Europe, this time against nuclear utilities. It is proposed to impose restrictions on the world’s largest player in the market to “protect its energy sector.” Germany is once again the initiator of such demands. It is notable that the funds earmarked for creating an alternative to Russian companies are being allocated to Germany-based research facilities.

Politico, a leading business newspaper, acknowledges that imposing restrictions on Moscow may result in a slower and more costly development of essential technologies. For instance, earlier this year, American nuclear research facility Ultra Safe Nuclear Corporation (USNC) had to alter its project due to the inability to secure HALEU supplies.

Hungary’s Energy Minister Csaba Lantos expressed Budapest’s interest in SMR as early as the middle of last year, including the option of cooperation with Russia in this area. Hungary is once again defending its interests against increasing pressure. It remains to be seen whether Budapest will be able to maintain its position or whether it will have to concede on the common cause.

Hungarian forint at breaking point: Near-historic low against pound sparks concern

hungarian forint euro pound money economy

The Hungarian forint has plummeted to a two-year low against the British pound, with HUF 501.5 required to purchase a single GBP on Monday morning. This is just shy of the all-time record of HUF 502.9, illustrating the domestic currency’s sustained weakness. The euro-forint exchange rate has also breached new lows, with the common European currency trading above HUF 415, marking its weakest performance in two years.

Weakening: Regional and global factors in play

The Hungarian forint’s poor performance extends beyond major currencies, as it also hit unprecedented lows against the Polish złoty and the Czech koruna, Világgazdaság reports. Analysts point to several key factors driving the depreciation. Chief among them is Moody’s recent downgrade of Hungary’s credit rating outlook from stable to negative. This shift, announced late last Friday, has shaken investor confidence, prompting a reassessment of regional holdings.

The downgrade reflects concerns over Hungary’s governance and its potential loss of EU funds, exacerbating fears about the country’s fiscal stability. Simultaneously, global market trends have added to the pressure, with the US dollar gaining strength. The dollar index (DXY), which measures the greenback against a basket of currencies, climbed 0.47%, signalling broad-based demand for safer assets.

Policy dilemma: Balancing rates and stability

Economic experts like Viktor Zsiday, portfolio manager at Citadella Fund, highlight deeper systemic issues. In Portfolio’s article, Zsiday argues that Hungary’s current interest rate policies are insufficient to stabilise the currency. Despite recent rate cuts aimed at stimulating growth, these adjustments have inadvertently fueled the Hungarian forint’s slide.

Zsiday outlines two potential paths forward: continued rate cuts, which risk further depreciation and heightened inflation, or raising rates to attract investors and stabilise the forint. However, both options come with significant economic trade-offs. He also underscores that the root cause of investor apprehension lies in Hungary’s economic policies and political risks, which only the government can address.

Hungarian forint: creator of challenging environments

The weak forint creates a challenging environment for businesses and consumers alike. With Hungary heavily reliant on imports, the currency’s depreciation inflates the cost of goods, fueling domestic inflation. This, coupled with high interest rates, creates a precarious economic environment. Hungary’s monetary policymakers face mounting pressure to restore investor confidence while balancing domestic economic needs. Yet without significant reforms or shifts in fiscal policy, stabilising the forint may remain a distant goal.

At 5 PM, the EUR/HUF exchange rate was above the 415 level with one euro costing HUF 415.07. The GBP/HUF rate had not improved too much by 5 PM, with one pound costing HUF 500.62 at the time of writing this piece. As for the US dollar, one greenback cost HUF 396.73 at 5 PM on Monday.

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Featured image: depositphotos.com

December 2, 2024

Orbán cabinet: Hungarian households’ energy bills lowest in Europe

Hungary's gas reserves consumption energy

Household energy prices in Hungary were the lowest in Europe in November, even at purchasing power parity, the government commissioner for the regulated household utilities price system said on Monday.

Szilárd Németh said residents of Budapest paid an average 2.56 eurocent/kWh for their gas, less than in any other European capital included in a survey commissioned by Energie-Control Austria and the Hungarian Energy and Public Utility Regulatory Authority (MEKH). Households paid 9.31 eurocent/kWh for their electricity in November, up to the average consumption level, and 10.73 eurocent/kWh over that threshold, the second-lowest price after Belgrade, he added.

Németh noted that nine in ten households paid the regulated price for gas and eight in ten the regulated price for electricity.

At purchasing power parity, Budapest households paid the lowest gas and electricity prices compared to other European cities, he said.

He added that EUR 2.12bn (HUF 880bn) had been earmarked in the 2025 budget bill to support regulated utilities prices.

Hungary PMI in November: slight expansion

Hungary’s seasonally-adjusted Purchasing Managers Index (PMI) stood at 50.3 points in November, climbing from 47.9 points in October, the Hungarian Association of Logistics, Purchasing and Inventory Management (Halpim) said on Monday.

The PMI edged over the 50-point threshold that signals expansion in the manufacturing sector, Halpim said.

Among the PMI sub-indices, the new orders index rose and was over the 50-point mark.

The production volume index increased and indicated expansion.

The employment index fell and continued to show a contraction.

The delivery times index fell.

The gauge of purchased inventories rose but was still under the 50-point mark.

December 2, 2024

Number of jobseekers continues to fall in November

The state secretary for employment policy said on Monday that the number of jobseekers in Hungary stood at 224,914 in November, 1,200 fewer than in the same month a year earlier, citing data from the National Employment Service (NFSZ).

The November figure was the lowest for the month in more than three decades, Sándor Czomba said. The number was down 1,300 from the previous month, he added.

He said the government aims to boost the employment rate by tapping the 300,000-strong labour market reserve. Around 23,000 job seekers have found work as a result of recently launched European Union-funded government placement programmes.

The Minister of State for Employment Policy added that in addition to further employment growth, the government’s priority is to increase the purchasing power of incomes. The government has fulfilled the first point of the New Economic Policy Action Plan, which consists of 21 measures. As a result, the minimum wage will rise by 40 percent by 2027, by 9 percent to 290,800 forints in 2025, by 13 percent to 328,600 forints in 2026, and by 14 percent to 374,600 forints in 2027, setting the stage for a fourfold increase compared to 2010. Related article: Three-year minimum wage agreement set to impact everyone’s pay in Hungary

The government will help employers who employ workers on the minimum wage to secure a wage agreement. They will have to pay the increased social contribution tax “on a sliding scale”, i.e. in 2025 they will have to pay the 2024 rate in 2025, in 2026 the 2025 rate and in 2027 the 2026 rate.

Featured picture: Depositphotos

December 2, 2024

Hungary’s car industry crisis: Are mass layoffs inevitable?

Hungarian industry is increasingly struggling with a phenomenon known as “internal unemployment”. This term describes a situation where companies retain excess labour despite weak order books.

This happened briefly during the 2008-2009 financial crisis, but only for a few months. Now, however, the problem has persisted for almost two years. Companies are dealing with the situation by restructuring and reallocating working hours, but it is uncertain how long this approach will be sustainable. Companies such as Volkswagen in Germany have already made significant job cuts, raising the possibility of similar measures in Hungary.

The car industry crisis and an economic paradox

The car industry, a cornerstone of the Hungarian economy, is facing serious challenges. Slow demand from Germany, increasing competition from China and the ongoing shift to electric vehicles have put the industry under immense pressure.

While Hungary’s GDP contraction is unsurprising in this context, the labour market remains remarkably stable, with unemployment rates holding steady and wages continuing to rise. This apparent contradiction stems from companies’ reluctance to lay off workers. Employers fear that once the downturn eases, it will be difficult to rehire skilled workers, so they prefer to retain staff even in lean times.

The labour market has changed significantly over the past decade. Downsizing and rehiring, once a straightforward process, have become more complicated and costly due to widespread labour shortages and difficulties in recruiting qualified staff. This is particularly true in Central and Eastern Europe, where structural unemployment exacerbates the situation. As a result, companies are prioritising employee retention, even when there is insufficient work to justify current staffing levels.

How car companies in Hungary are coping with the crisis

According to Világgazdaság, Hungarian car manufacturers are adopting different strategies to cope with the current challenges. The Mercedes plant in Kecskemét, for example, has reduced shifts but retained its workforce, while launching retraining programmes. Bosch has taken a similar approach, focusing on retraining and internal redeployment to minimise redundancies despite a global slump in orders. In contrast, the SK On battery plant has already resorted to layoffs and its production future remains uncertain.

Experts warn that the current strategy of retaining workers is not sustainable indefinitely. Unless external demand picks up in the coming months, mass redundancies may become inevitable in Hungary. While some companies, such as Volkswagen in Germany, have already made significant cuts, the question is how long Hungarian companies can maintain their current approach. In the best-case scenario, companies will manage the downturn through retraining and redeployment. The worst-case scenario could see a wave of redundancies, further increasing the economic burden.

The state of the Hungarian industry requires close attention. Although many companies are trying to avoid layoffs, this is only a short-term solution. The coming months will determine whether the economic climate stabilises or worsens, and ultimately when “intra-gate unemployment” could turn into full-blown unemployment. The future of Hungary’s automotive sector and other key industries depends on how effectively companies adapt to the changing global landscape and economic realities.

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December 2, 2024

AAFX vs. XBTFX Trading in 2024: Which Broker Delivers More Value? Full Details Inside

a pile of bitcoins sitting on top of a table crypto

When choosing a broker, traders often prioritize features like spreads, leverage, account options, and platform availability. XBTFX and AAFX Trading are two brokers that have gained attention for their distinct offerings and trading conditions. But which one aligns better with your trading strategy and cost preferences? Keep reading to discover how these brokers compare and what they offer.

AAFX Trading: Main Features and Insights

AAFX Trading has been in the industry since 2014, providing access to STP (Straight-Through Processing) and ECN trading technologies. The broker provides access to more than 150 instruments, such as Forex pairs, commodities, indices, equities, and digital assets.

Account Types and Platforms
AAFX Trading provides several account options, featuring both fixed and variable spreads. The broker’s ECN account starts with spreads as low as 0.8 pips, while the VIP account offers even tighter spreads starting at 0.7 pips. AAFX also provides a free demo account, allowing traders to test strategies without risking real funds.

Traders on AAFX have access to the MetaTrader 4 (MT4) and MetaTrader 5 (MT5) platforms, known for their robust analytical tools and support for automated trading systems, such as trading robots. This makes AAFX particularly appealing to those interested in algorithmic trading.

Fee Structure and Leverage
AAFX does not charge deposit or withdrawal fees, which can be a significant cost-saving feature for high-volume traders. The broker’s leverage reaches up to 1:2000, offering significant trading power but also increasing exposure to risk. This high leverage is attractive to traders looking for substantial market exposure with limited capital.

Partnership Programs and Support
AAFX offers three types of partnership programs that reward affiliates based on client deposits rather than trading activity. Affiliates can earn a 10% bonus on deposits made by referred clients, which is a straightforward way to generate additional income.

Customer support is available six days a week (24/6), providing assistance through live chat, phone, and email. While this is generally sufficient, it may fall short for traders who require support during weekend trading sessions.

Challenges
While AAFX offers competitive spreads and no withdrawal fees, it lacks investment programs like MAM or PAMM accounts, which might limit options for traders interested in passive income streams. Although the broker is based in Saint Vincent and the Grenadines, it lacks oversight from major financial regulators. This may be a consideration for those who prioritize a highly regulated trading environment.

XBTFX: An In-Depth Look

XBTFX is a broker specializing in CFD and cryptocurrency trading, catering to a global audience with its wide selection of assets. Traders Union reports that the broker provides access to over 200 trading instruments, including cryptocurrencies, stocks, indices, commodities, and precious metals.

Account Types and Platforms
XBTFX provides two primary account options for trading: Standard and ECN. Both accounts are designed to accommodate different trading styles, with the Standard account being commission-free and the ECN account providing raw spreads starting from 0.01 pips, with a commission of $3.5 per lot. Additionally, a swap-free Islamic account is available for traders with specific requirements.

Traders can access the widely used MetaTrader 4, MetaTrader 5, and cTrader platforms. These platforms are renowned for their advanced charting tools, algorithmic trading capabilities, and customizable interfaces. This ensures that traders can leverage sophisticated trading strategies with ease.

Fees and Leverage
XBTFX’s pricing model is particularly favorable, especially for ECN account holders. With spreads starting at 1 pip on Standard accounts and as low as 0.01 pips on ECN accounts, traders benefit from cost-efficient trading. The maximum leverage available is 1:500, which provides substantial trading power but also requires careful risk management.

Passive Income Options and Support
XBTFX offers several passive income opportunities, such as copy trading, MAM (Multi-Account Manager), and PAMM (Percentage Allocation Management Module) accounts. Additionally, the broker features a referral program with multi-level commissions, allowing users to generate income by attracting new clients.

Customer support is available 24/7 through phone and email, ensuring that traders have access to assistance at any time. However, one limitation is that deposits and withdrawals can only be made using cryptocurrencies, which might not appeal to traders who prefer traditional fiat options.

Challenges
While XBTFX has gained positive reviews for its offerings, one issue that might concern some traders is its lack of regulation by major financial authorities. The broker is registered in Antigua and Barbuda, which may not provide the same level of regulatory oversight as institutions like the FCA or CySEC. For those who prioritize regulatory compliance, this may be a factor to consider.

Differences between XBTFX and AAFX Trading: Main Findings

XBTFX and AAFX Trading are both catering to different types of traders. XBTFX offers extensive asset options and passive income opportunities, making it suitable for those looking to diversify their trading approach. Its fee structure is favorable, especially for ECN account holders, although the requirement to transact solely in cryptocurrencies may not suit everyone.

AAFX, on the other hand, focuses on providing fast execution, tight spreads, and higher leverage, which appeals to traders looking to maximize market exposure. The absence of trading fees and withdrawal charges makes it attractive for cost-conscious traders. However, the lack of investment programs and a slightly limited customer support schedule could be drawbacks for some.

Expert Analysis

Mirjan Hipolito, cryptocurrency and stock expert, weighs in on the comparison between XBTFX and AAFX Trading:
“Each broker brings distinct benefits, tailored to suit different trader preferences. XBTFX is well-suited for those interested in passive income strategies like copy trading and referral programs. It has a robust set of tools for those who want flexibility in how they approach the market. AAFX, on the other hand, appeals to traders who focus on cost efficiency and leverage. The zero-fee withdrawals and tight spreads make it a compelling option for active traders. Ultimately, the choice comes down to whether a trader prioritizes cost efficiency or asset diversification.”

December 2, 2024

The Hungarian National Bank has become the world’s 2nd biggest in the gold purchase market

Based on official data, the Hungarian National Bank bought 15 tonnes of gold in the third quarter of this year. That means Hungary has emerged to the 2nd position in the global gold purchase market. Furthermore, the Hungarian National Bank’s gold reserve grew to 110 tonnes, a historic high.

The Hungarian National Bank acquired lots of gold

According to Népszava, in Q3 2024, the Hungarian National Bank became the 2nd strongest player in the global gold purchase market by acquiring 15 tonnes of gold. Poland bought 42 tonnes, while India only had 13 tonnes. Thus, Hungary could precede New Delhi.

Krisfót Juhász, a manager responsible for purchasing investment gold at Conclude Investments Ltd, said the national bank’s acquisition means the rate of gold compared to the country’s FX reserves grew to 14%.

The Hungarian National Bank has become the world's 2nd biggest in the gold purchase market — Photo: MNB

The price of gold gradually increased this year by 30%. The price of gold overcame the gap between USD 1000 and 2000 in just under 15 years, while it took less than 10 months to bridge the gap between USD 2000 and the current peak of almost USD 2800 reached at the end of October. Goldman Sachs believes the price will reach USD 3,000 by the end of next year. Currently, it is at USD 2,650 because of Trump’s victory. Mr Juhász expects that gold prices will not grow significantly because the Trump administration is a supporter of digital currencies like Bitcoin, which reached USD 100,000.

Gold price decreases due to Trump’s victory

Mr Juhász said emerging economies like Azerbaijan, India, Poland, and Singapore invest their saved money into gold acquisition.

In Hungary, people buy gold because of the weak forint. Mr Juhász said that the moment the price of one euro rose above 400, Hungarians started to store the precious metal to secure their savings. He said it had not been rare recently in Hungary to meet buyers who took multiple kilograms of gold home.

We detailed in THIS article that PM Orbán nominated his old ally, Finance Minister Mihály Varga the new governor of the National Bank of Hungary. György Matolcsy’s term will end in March. Mr Varga is an economist and has been an MP since 1990. During the first Orbán government (1998-2002), he served as a finance secretary.

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National Bank of Hungary raises gold reserves to 110 tonnes
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December 1, 2024

Good news: sweets maker Szerencsi BonBon increases production

Sweets maker Szerencsi BonBon inaugurated a HUF 1bn upgrade of its chocolate plant in Szerencs (NE Hungary) on Friday.

The investment was supported by a HUF 500m government grant. The remaining cost was covered from bank credit and internal funds. The ceremony was attended by state secretary of the Finance Ministry András Tállai. Managing director István Takács said most of the investment cost was spent on packaging equipment purchase. Szerencsi BonBon had revenue of HUF 2.6bn last year, public records show.

Szerencsi Bonbon new plant — The inauguration of the new plant. Photo: MTI

Florin winds up HUF 8.5bn investment project

Hungarian sanitiser and cosmetics maker Florin inaugurated an automated warehouse at its base in Szeged (S Hungary) on Friday as the final phase of a multi-year project. Florin invested HUF 8.5bn in upgrades in the past five years, using funding from the European Union, government grants for boosting Hungary’s self-sufficiency in production of healthcare supplies and government grants for large companies, Finance Minister Mihaly Varga said at the event.

Varga noted that in the healthcare industry support programme, 60 Hungarian-owned enterprises implemented HUF 90bn of investments during the pandemic. In the investment support programme for large companies, launched in 2015, some 200 Hungarian enterprises made investments worth almost HUF 600bn and created 4,700 new jobs.

Florin managing director Attila Barta said the company’s base has been completely renovated in the past five years, with old buildings and equipment replaced by new buildings, machinery and an automated warehouse. Florin had HUF 3.9bn revenue in 2022, public records show.

Waberer’s acquires majority stake in Magyar Posta insurers

Listed Hungarian haulier Waberer’s completed an acquisition to acquire 66.925pc of life insurer Magyar Posta Eletbiztosito and non-life insurer Magyar Posta Biztosito, Waberer’s said on Friday. Waberer’s acquired the insurance companies through its unit Gránit Biztosító.

With the expanded service portfolio and customer base, Waberer’s aims to further strengthen its market position and become a leading player on the Hungarian insurance market in the longer term, it said in a statement.

Magyar Posta Biztosito and Magyar Posta Életbiztosító had revenue from premiums of HUF 60.7bn in 2023. The stakes in the insurers were sold by state-owned Corvinus International Investment.

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December 1, 2024