Shocking decline: How Hungary fell behind its neighbours after joining the EU
Hungary joined the European Union in 2004 with the aim of catching up or at least approaching the economic and social development of Western European countries. The optimism of the country, then one of the most advanced economies in the region, was well-founded: a network of motorways, a cheap and skilled labour force and infrastructure made Hungary attractive to investors. By tapping into the resources and opportunities offered by the EU, growth and development were a given, at least on paper.
Over the past two decades, the Hungarian economy has grown in terms of numbers, but it has fallen back significantly compared to its competitors. According to Népszava, GDP per capita in purchasing power parity terms has increased by a factor of 2.2, but the country has slipped from 19th to 22nd place in the EU.
It is particularly unfortunate that Romania and Bulgaria, which started out in a much weaker position than Hungary, have now overtaken it in many indicators. In terms of consumption, for example, Hungary fell from second last in 2022 to last in 2023, ahead only of Bulgaria, which has also moved up in the meantime.
Employment and income
The labour market is one of the areas where the Hungarian economy has achieved outstanding results. Employment rates have improved significantly, with the employment rate for the 15-64 age group rising from 57% at the time of entry to 74.4%, making it one of the best performers in the EU.
Wages have also increased significantly: Hungarian wages in purchasing power parity (PPP) terms have increased by almost two and a half times, ahead of Slovakia. However, the picture for pensions is less favourable, with Polish, Romanian and Slovakian pensions also rising faster than Hungarian pensions. Consumption is also on a downward trend: from being the region’s second in 2004, it has fallen to last place in 2022.
Policy mistakes, economic downturn and corruption
The deterioration in Hungary’s economic performance is closely linked to policy failures. Under the MSZP-SZDSZ government, the economy was characterised by loose fiscal policy and indebtedness after accession. Although many infrastructure investments were made, the 2008 financial crisis severely set back the country’s performance. A EUR 20 billion loan from the EU and IMF saved the country from bankruptcy, but recovery has been slow.
After 2010, the Orbán governments adopted an unorthodox economic policy stance that initially dampened growth. Later, growth was artificially stimulated by the central bank and the government pumping large amounts of money into the economy, which produced short-term results but led to higher inflation and structural problems in the longer term. An industry-led economic policy, with a focus on low-value industrial production rather than high-value-added innovation, has also contributed to the regional backwardness.
Corruption and the lack of rule of law have exacerbated the situation. The Orbán governments have often used EU funds inefficiently and established a system of patronage. Rampant corruption has led the EU to suspend a number of EU funds, costing the country billions of euros. In recent years, these policies have not only alienated foreign investors, but also Hungarian businesses, and a growing number of Hungarian businessmen have voiced their criticism of economic governance.
The future
The future of the Hungarian economy depends on fundamental reforms. Restoring the rule of law and fighting corruption are essential to regain access to EU funds. Meeting the conditions for euro adoption can provide a stable anchor for a new economic policy aimed at sustaining growth and improving competitiveness. Without the promotion of free competition and the development of high-value-added sectors, the Hungarian economy could remain trapped in middle-income countries.
Read also:
I hope that Martin Németh has a lot more to say about this subject in 2025. Enlightening the masses before the next election (early or not) is a vital part of countering the current government’s colossal propaganda machine. Doing so will not be an easy job.
But is never Fidesz fault, right? It is because the high amount of immigrants, the LGBT propaganda, soros and also the ucranians. I just hope that for the sake of improvement, Fidesz can be kicked out from power. And listen very careful, it does not mean to be pro migration and gender and bla bla. Its about to finish this corrupt and propagandist government you have.
At what point do Hungarians say enough of Fidesz excuses for economic mismanagement and blame the government itself? The end of the war in Ukraine is a risk for Orban because he will have to come up with a new excuse. What could it possibly be? Where I come from we hold the government accountable always and the media does not act as a cheerleader for the government but does its’ job to point out government wrongdoing. Hungarians are a nation of fools led by a band of thieves.
Stereotypical elitist rubbish from the Népszava.
Gdp per capita increased, wages increased, unemploment went down, the entire German car industry flees to Hungary, because we still have gas, and all of these irrelevant facts cause people to not rebell, when the holy consumption is down?
It has to be a joke.
And I know, the left is proud, to be the host of all the overeducated “scholars”, who are too “sophisticated” to learn to btush their teeth, let alone to cook or clean, like the slave class should, but most of the nation, tends to priroritize stuff that is actually important, and the arrogant, abstract sophistry only angers them.
It should be self evident common sense, that you don’t insult the person you want to convince. A 5 years old child knows that.
Sadly the left is so bitter with spite, they can’t suppress it even for a 5 minute conversation.
So they are destined to lose every election.
Let’s assume you’re right. It’s of almost no relevance because the left is unlikely to even reach the threshold for entering parliament at the next election. Tisza is a centre-right platform and this is what makes it so politically dangerous for the incumbents, as it’s completely in tune with the majority of the Hungarian electorate.
Pride is the fall back position of losers who cannot accept the reality of their situation and the need for change. Bad governments use nationalism to control born suckers.
Hungary has had so much money from the EU! Where’s it gone? A lot into the pockets of corrupt politicians! Get rid of Putin’s puppet, Orban.
Mark & Londonsteve – your commentaries, rest comfortable in my thought process and opinions, of the gargantuan challenges still to be faced by Hungarians, if they believe and want to effect the DOWNFALL, of the Orban – Fidesz Government.
(1) – what is BEST for ALL Hungarians.
(2) – what is BEST for Hungary.
Its deeper than a cultural change needed by the LEFT, the “game” being played out under the theme of SPITE for as the longer this dominates in there MINDS – there actions, it in fact serves as a FEED to the Orban – Fidesz Government, giving them greater survival capacity, to be in 2026, or earlier, as the Government of Hungary.
Orban – and the Fidesz Government “machine” can ride out, cope with handle, the SPITEFULLNESS agenda, being “thrown” at them from the left.
The conundrum, is in finding that “to the bone” political attack on the Orban – Fidesz Government from the Left or Center Right Platform, that totally DEALS in FACTS – not playing “the man” but by FACTS – just NOT allowing any ability of the Orban – Fidesz Government, the ability to DEFEND them-selves.
This need of FACTS – we know Victor Mihaly. Orban and his Fidesz Government, will in DEFENCE of FACTS, that highlight there DESTRUCTION of Hungary, there response will be of BLAME “others” not us and just LIES.
Facts – bombarded at the Orban – Fidesz Government – the EFFECTIVENESS – the POWER of Facts “fired” at them, the impact, in the witnessing of there DOWNFALL, the Orban led Fidesz Government, from an individual perspective to a Government, will be of greater Joy & Satisfaction, that HIGHLIGHTS individually and the FACT of them being the “Heinous” Government, under the Prime Ministership of Victor Mihaly. Orban, rather than playing this “Game of Spite”.
WE KNOW, it WORSENS – that the “Transepts” of Hungary, have collapsed inwards, the walls, the CORE of Hungary, our backbone has been SMASHED.
In FACT as a country we are IMPLODING.
In not playing by the Left nor Center Right Party – the NEED of there CREED being FACTS & Truth, there needs to be an Education, that gets BLASTED out into the Hungarian population, the NEED to NOT vote by Emotion but by Conscience.
CLEAR the Heads – don’t be DOMINATED by your Emotion, family past history, location in Hungary you reside, your working environment, social clubs, places of education – clear the HEADS eradicate your vote being DRIVEN by Emotion through maybe SPITEFULNESS.
(1) – what’s BEST for ALL, that includes of course YOU – for ALL Hungarians,
and secondly;
(2) what’s BEST for Hungary.
Facts & Truth – just decimate obliviate that the practice and enforcement – the POWER behind these (2) two words will DESTROY – bring to an end, the DOWNFALL of the Orban led Fidesz Government.
Hungary, we can RISE from the Ashes – that Facts & Truth – our OWN consciences, must be the PARAMOUNT ammunition, we use as our ARMOURY / Arsenal, to eradicate the Orban led Fidesz Government.
Hungary – my fellow Hungarians – examine your OWN conscience – ask this question of your-self – what has the Orban led Fidesz Government done for You, for your FUTURE ???
James Earl. Carter – 39th President of the United States of America did say ;
“To be TRUE to ourselves, we MUST be True to others.”
Hungary made a terrible mistake when it joined the EU. People keep saying all the money the EU gave to Hungary, how about talking of the profits of western countries took out of the country, or the amount of money Hungary transferred to keep the fat cat dictators in milk and honey in Brussels.
Time to correct the mistake. Leave the EU and free the country from Brussels’ dictatorship.
Happy new year to all patriotic Hungarian citizens.
What have the profits of foreign companies got to do with EU funds? Foreign investment leads to net profits being repatriated either way, the difference is that Hungary received more foreign investment due to membership of the EU. Is the alternative of these investments never having taken place and workplaces never having been created more appealing? Too many Hungarians seem to believe the country was doing the world a favour by accepting foreign investment when the opposite is true. It’s a big and competitive world, there are plenty of places investors are welcomed with open arms if Hungary doesn’t want it, while the decision to not invest is made massively easier if a country exits the single market. Ask the UK how going it alone is going.
a) most if not all foreign companies would not have located subsidiaries if Hungary had no access to the common (EU) market. This also applies to all of the Asian investment. Product is made for the EU market. Basta.
b) the EU GAVE Hungary a conservative 3.5 percent of GDP each year, every year, since we joined. Add to this know how, other assistance and funds … It really puts our Politician´s “Economic Success!” story in a different light.
Keeping it short – easy from a-z. There is a reason why all those other countries want to join the EU, even as our Politicians persist in bleating. To the extent there are downsides, it is massively overcompensated by the upsides. And our Politicians´ friends, family and toadies would not have been as rich. “Please give us back Erasmus!”
Dear Mariavontheresa
My wife has said almost exactly the same things for years. It is so pleasing g that another lady shares her incisive views.
Let’s be clearer… did the decline come after joining the EU or after electing and re-electing the comic opera buffoon known as Orban?
Have read today that Hungary and Bulgaria ranked lowest at 30% below the EU average. Consequently, that ranks Orbán with an IQ less than the size of his boots.
But sadly, when one reads his propaganda media, Hungary is leading in everything up front.
As for the Forint, Hungary sadly lost over 40% since Orbán arrived.
The nation needs to hope that Magyar will liberate the nation.