Hungarian economy

PM Orbán says Christmas ceasefire and large-scale POW swap are realistic

Prime Minister Viktor Orbán said on Thursday that there was no consensus within the European Union regarding the war in Ukraine, so everything had to be done in connection with the war within the framework of bilateral diplomacy and not on behalf of the Hungarian EU presidency.

Ceasefire at Orthodox Christmas?

Orbán told a joint press conference with President of the European Council Antonio Costa and President of the European Commission Ursula von der Leyen after the EU summit in Brussels that the Ukraine war was the most important political issue but he had essentially no room for maneuvering on the matter because there was no consensus in the EU and it was therefore not possible to act on behalf of the European Council.

“So everything that could be done in the issue of the war had to be done independently from the presidency, not under the presidency’s framework. Actually under the arrangements of bilateral diplomacy,” Orbán said.

Orbán said much had been done, for instance a proposal for a Christmas ceasefire which had been presented outside the framework of the presidency.

In response to a question, he said he was aware that everyone wanted lasting peace and was thinking along the line of greater geopolitical context but Hungary had its own limits such as its size and its international influence corresponded to that.

He said he could see no obstacle to preventing the death of people in the frontline during the two or three days of Orthodox Christmas and to an agreement between the sides about the exchange of 700 prisoners from each side.

He added that this might be a small achievement compared to geopolitical goals, but if a few thousand fewer people die during Christmas, and if a few hundred or thousand fathers can return home to their families, it will be a European value.

We must take back leadership from the generals

Answering another question, Orbán said that he had seen in the past three years that there was no solution to the war on the battlefield. “I have seen some combative statements, military maneuvers, new weapons, hundreds of thousands dying, hundreds of thousands getting crippled, and who knows how many widows and orphans,” he added. Orbán said it was time for diplomacy to take back leadership from the generals, otherwise the war will not end within the foreseeable future.

In response to a question about how Donald Trump would end the Russia-Ukraine war as US president “in 24 hours”, Orbán said he had no authorisation to talk about the plans of other leaders. He said he had personally met Trump in the past two weeks, had a very long discussion with Russian President Vladimir Putin, and also met the president of Turkiye. He added that “even if everyone has something on their mind” he could only speak about his own plans.

Assessing the Hungarian presidency coming to an end on December 31, Orbán expressed thanks to von der Leyen and the EC for their excellent cooperation, and said that they had been able to put aside all political disputes in order to advance important matters. He also expressed thanks to Costa and his predecessor Charles Michel, saying that they had also done much in the interest of success.

Hungary’s political presidency

Orbán said there had been unprecedented security challenges in the past six months, with wars in Ukraine, in the Middle East and Africa, with a permanent danger of escalation. Illegal migration and its consequences threaten with the disintegration of the Schengen area, and economic indicators show that the EU is losing its global competitiveness, falling increasingly behind the main economic competitors.

In the meantime, the other global players have ambitious plans, with “some wanting to stay great and some wanting to become great”. As a result, Orbán said it had been decided that Hungary would operate a political presidency and not a bureaucratic one. He added that a great amount of work had been invested in the past six months, with the entire Hungarian state apparatus working to ensure that progress was being made.

In terms of competitiveness, Orbán said the Budapest declaration deserved historic attention considering that it calls for “a revolutionary streamlining”, affordable energy, supporting SMEs, and sets deadlines for the fulfillment of each task.

Orbán said another important point of the Hungarian presidency was that ministers responsible for demographic challenges met for the first time in the EU’s history to discuss the future of Europe’s demographics.

He also said that progress had been made in enlargement policy in the Western Balkans which had been blocked for a long time, talks could be started with Albania, three intergovernmental conferences were held and the organisation of an intergovernmental conference with Serbia is within reach.

Romania, Bulgaria Schengen accession huge success, says Orbán

The Hungarian prime minister noted that a decision about the full membership of Bulgaria and Romania in the EU’s Schengen zone had been made under the Hungarian presidency. The issue he said had been on the agenda for the past thirteen years and Hungary had held talks over six months with countries that had opposed the integration of the two countries. As a result, the full integration of the two countries will take effect on January 1, he said.

The current Hungarian presidency was the first occasion that 27 agriculture ministers managed to reach an agreement on the Common Agricultural Policy’s future, he said.

Orbán said that “we have also managed to adopt a declaration on fighting anti-Semitism and promoting Jewish life”. The declaration establishes that there is an alarmingly high-level of anti-Semitism in the EU and the community has a shared responsibility to make every possible effort towards reducing it, he said.

Orbán said that he became increasingly convinced over the past six months that the only possible way to the success, even the survival, of the European Union was if the EU makes itself more ambitious and undertakes “great things”.

“The Hungarian presidency’s slogan to make Europe great again was not a joke,” the prime minister said, adding that this was the only way for the EU to regain its competitiveness and to survive.

Asked about transatlantic cooperation, Orbán said there was full agreement at the summit that the future and security of Europe depended heavily on whether transatlantic cooperation could be maintained.

As regards the inauguration of the new US president on January 20, Orbán’s advice to the EU was to have “strategic patience and calm”, suggesting that “they should do nothing that would make future strategic cooperation within transatlantic relations more difficult”.

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December 20, 2024

Rate of Hungarian wage increase in Q3 third highest in EU

In the third quarter of 2024 the pace of wage increases in Hungary, compared to the same period of last year, was the third highest in the European Union, business news site portfolio.hu said on Tuesday quoting data from Eurostat.

Eurostat data show that in Q3 2024 the hourly labour costs rose by 5.1pc in the EU, compared with the same quarter of the previous year. The costs of hourly wages and salaries increased by 5.0pc and the non-wage component increased by 5.3pc.

In Q3 the highest increases in hourly wage costs for the whole economy were recorded in Romania (+17.1pc), Croatia (+15.1pc), Hungary (+14.1pc).

The non-wage component in Hungary was up 12.8pc in the third quarter, the sixth highest number in the EU. Hourly labour costs were up 13.9pc, again the third highest rate.

Hungary falls behind as Romanian and Bulgarian wages surge

In recent years, few economic indicators have captured Hungarian public attention as much as those showing Romania not only catching up to but surpassing Hungary. Two key metrics often cited are GDP per capita adjusted for purchasing power parity (PPP) and household consumption levels. Both reveal Romania’s significant progress over the past decade within the EU rankings.

For those seeking to maintain the perception of Hungary’s economic advantage, fewer and fewer data points remain convincing. However, the macroeconomic figures also hide contradictions—most notably, that Romania’s progress has not been equally shared across its society.

The rise of Romania’s wealthiest

According to the report of G7, over the last decade, Romania’s top earners have made significant strides within EU income rankings. In contrast, middle-class gains have been more moderate, and the poorest 25% of the population remain largely stagnant. EU-wide income percentile rankings illustrate this disparity by ordering the incomes of all EU citizens and comparing individual country groups to the EU average.

For instance, in Hungary, the 90th income percentile moved slightly forward between 2020 and 2023, ranking ahead of 29% of EU earners compared to 28% in 2020. Full convergence, however, would require Hungarian groups to match or exceed their EU counterparts’ rankings—for example, the Hungarian 90th percentile would need to rank above 89% of EU earners.

Romania has exhibited a similar pattern in recent years, with the greatest gains among the upper and middle-income groups. Only the poorest fifth of Romanian society remains firmly at the bottom of EU rankings. In euro terms, which exclude local cost-of-living adjustments, the income growth among Romania’s higher earners is even more pronounced, highlighting a tangible improvement in living standards.

Bulgaria closes the gap

Bulgaria’s standard of living historically attracted little attention in Hungary, but Romania’s leap has shifted the focus. Bulgaria recently surpassed Hungary in household consumption levels (adjusted for PPP), aided by Hungary’s record-breaking inflation. From 2020 to 2023, Bulgaria’s top-earning 50% also advanced significantly in EU rankings, with the wealthiest Bulgarians already ranking among Europe’s highest earners since the start of the decade.

However, PPP-adjusted income data should be viewed cautiously, as figures for both the wealthiest and poorest segments are often less reliable. Still, in euro terms, only the top third of Bulgaria’s population has seen a relative improvement in the EU income rankings.

A three-way competition

In Hungary, only the top 15% of earners saw progress between 2020 and 2023, while lower-income groups largely slipped in the EU rankings. Comparisons between Bulgaria, Hungary, and Romania reveal that Hungary’s advantage now persists only among its bottom 45% of earners,

while the wealthier 55% of Romanians and Bulgarians have overtaken their Hungarian counterparts.

Hungary still holds a slight lead in EU income rankings when measured in euros, disregarding local cost-of-living differences. Government-aligned analysts often emphasise this comparison to downplay Romania’s progress. However, this approach becomes less favourable when Hungary’s figures are compared with those of higher-cost, more developed countries, where Hungary’s lag is even more apparent.

The future of convergence

The rapid pace of convergence in Romania and Bulgaria is undeniable. While their progress is most visible when adjusting for purchasing power, middle-income groups in all three countries now enjoy broadly similar living standards. As these trends continue, the disparities that once defined economic rankings within the region are diminishing, leaving Hungary’s economic edge increasingly tenuous.

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Featured image: depositphotos.com

December 17, 2024

Hungarian policymakers set base rate at the year’s final meeting – update

The Monetary Council of the National Bank of Hungary (NBH) decided to leave the central bank base rate unchanged at 6.50pc at a monthly policy meeting on Tuesday.

The National Bank policy makers left the base rate on hold at the previous two meetings, in October and November, too.

The Council also left the O/N deposit rate at 5.50pc and the O/N collateralised loan rate at 7.50pc. The rates mark the ends of the central bank’s symmetric interest rate corridor.

In a statement released after the meeting, the Council said the expected interest rate paths and future fiscal policies of major economies are still surrounded by uncertainty. Ongoing geopolitical tensions are raising upside risks to inflation through risk aversion towards emerging markets. Looking ahead, a careful and patient approach to monetary policy is warranted. In the Council’s assessment, geopolitical tensions, volatile financial market developments and the risks to the outlook for inflation warrant further pause in cutting interest rates.

“In the current macroeconomic environment, the Bank can make the most effective contribution to the easing of economic agents’ increased precaution and to the restart of economic growth by maintaining price stability and financial market stability” the policy makers said.

“Restrictive monetary policy contributes to the maintenance of financial market stability and the achievement of the inflation target in a sustainable manner by ensuring positive real interest rates,” they added.

The NBH said it considers it crucial that short-term interest rates develop consistently with the level of interest rates determined by the Council in every sub-market and in every period. In line with its earlier practice, the Bank pays special attention to the expected state of the FX swap market at the end of the year. To ensure the effectiveness of monetary policy transmission, the NBH smooths movements in financial markets by using instruments with longer maturities in December, in addition to one-day FX swap tenders announced on a daily basis and weekly discount bill auctions.

At a press conference after the meeting, deputy governor Barnabás Virág said the expected inflation path for 2025 has shifted higher, and a persistent return to the 3pc inflation target has been delayed to 2026. He noted that despite the delay, inflation will remain within the tolerance band for most of 2025.

Citing the projections in the latest quarterly Inflation Report of the NBH, Virag said average annual inflation is set to reach 3.6pc-3.7pc this year. In the previous report, published in September, the NBH had put 2024 average annual inflation at 3.5pc-3.9pc.

The NBH forecasts average annual inflation of 3.3-4.1pc for 2025 in the fresh report, up from 2.7-3.6pc in the previous one, and between 2.5-3.5pc for 2026 and 2027.

The report also says that the Hungarian economy is expected to grow by 0.3-0.7pc in 2024. The NBH forecasts 2.6-3.6pc GDP growth in 2025, 3.5-4.5pc in 2026, and 2.5-3.5pc in 2027.

Virag said in 2024 Hungary’s economy will expand more moderately than expected. The subdued growth is due to factors beyond the scope of monetary policy, like agriculture output, German industrial production and postponed investments. From 2025 onwards, economic growth will be based on increasingly broad foundations and the economy is projected to enter a dynamic phase of growth from the middle of the year again.

Answering questions from journalists, Virag said a vast majority of rate-setters voted to keep the base rate unchanged and one member of the Council voted to cut the base rate by 25bp.

As we wrote yesterday, the future president of Hungary’s National Bank revealed key objective,s and his team, details HERE.

December 17, 2024

It’s over: European Commission has decided on Hungarian funds

European Commission has said Hungarian law changes aimed at addressing risks of conflicts of interest regarding “public interest trust” boards were insufficient to warrant the lifting of EU budget conditionality measures.

The measures recommended by the commission “to protect the EU budget from breaches of the principles of the rule of law in Hungary” were adopted on December 15, 2022, by the European Council, the EC noted in a statement.”These breaches related to the areas of public procurement, prosecutorial action, conflict of interest, the fight against corruption and the public interest trusts,” the statement noted.”Hungary formally notified the commission about specific legislative amendments regarding public interest trusts and entities maintained by them” on Dec 2, and asked the commission to propose to the council that the measures be adapted or lifted.The commission said Hungary’s changes to the law did not “adequately address the outstanding concerns on conflicts of interests” regarding the boards, so the measures should remain in place. It added that “adaptations that would be needed to remedy the situation sufficiently” had been outlined to the government.

“Hungary can at any time adopt and notify new remedies to demonstrate to the Commission that the measures adopted by the Council should be adapted or lifted,” the statement said.

Péter Magyar: ‘Fake national security review’ distracts as health and economy in ruins in Hungary

December 17, 2024

The influx of guest workers in Hungary decreased significantly this year

The landscape for guest workers in Hungary is undergoing a significant shift as economic challenges and stricter regulations reshape labour demand. While the influx of foreign workers has slowed, key sectors like logistics and hospitality still rely heavily on overseas labour, highlighting the growing complexities of Hungary’s workforce dynamics.

Number of guest workers in Hungary faces a major shift

As Portfolio reports, the influx of guest workers in Hungary has shown a notable shift this year, as economic challenges have caused the steady rise in numbers to plateau. According to the Hungarian Central Statistical Office (KSH), nearly 100,000 foreign workers were recorded in autumn, reflecting a decrease in growth.

Magdolna Mihályi, managing owner of Jobtain HR Services Ltd., explained that while the import of foreign workers continues, it has slowed due to a 5% drop in industrial production compared to last year. Factors contributing to this slowdown include a recession in the automotive sector, reduced investment, and stricter government regulations on foreign labour assessments. Additionally, Hungarian labour reserves are being mobilised more actively, further influencing the demand for foreign workers.

What is fueling the change?

Magdolna Mihályi of Jobtain HR Services Ltd. highlighted several factors behind the trend described above, including a sharp decline in investments, a recession in the automotive sector, and stricter government regulations on foreign labour assessments. Similarly, József Nógrádi, Commercial Director of Trenkwalder, noted a 25% drop in the inflow of foreign workers compared to last year, attributing it to European economic stagnation and tighter Hungarian policies. With domestic worker recruitment on the rise and existing guest workers filling critical roles, demand for foreign labour has fallen by 30% compared to the previous year. Stricter regulations have also improved transparency and eliminated exploitative practices, contributing to a more regulated labour market.

Struggling sectors

The demand for guest workers in Hungary is shifting as economic conditions vary across industries. While the automotive and construction sectors face redundancies, logistics, transport, and food continue to attract workers, particularly from the Philippines, Vietnam, India, and Indonesia. Despite efforts to mobilise domestic workers, labour shortages persist in hospitality, IT services, and waste processing. Experts note that Hungary’s declining working-age population and nearly full employment make foreign labour indispensable, though future demand depends on economic recovery and government policies. With strict regulations, the number of guest workers in Hungary is expected to stabilise around 150,000.

Hungary's dairy farm industry dominated by Phillipine, Indian, and Sikh guest workers — Photo: depositphotos.com

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Featured image: depositphotos.com

December 16, 2024

400+ forever? Analysts predict a bleak future for the Hungarian forint

Analysts do not expect the euro exchange rate to return to levels below 400 forints in the longer term, and trends suggest that it could reach a level of around 415-420 forints by the end of 2025.

According to Economx, the weak forint has a significant impact on consumer confidence, which is exacerbated by high inflation and expensive food prices. Although inflation is expected to moderate to 3.8% in 2024, households will continue to face declining purchasing power. This trend reflects the steady weakening of the forint in recent years, mainly due to high inflation, low consumer confidence and external economic and political uncertainties. The weak forint is also leading to further increases in the prices of imported goods, putting sustained pressure on household spending.

forint currency economy money — Photo: depositphotos.com

Inflation, which exceeded 20% in 2023, may fall to 3.8% in 2024, but price levels will remain persistently high. The weakening of the forint will further increase the cost of imported goods, including energy and food, which could generate further inflationary pressures. This will slow the recovery of purchasing power and undermine the stability of the forint.

The fall of Premium Hungarian Government Securities

The fall in the yields of Premium Hungarian Government Securities may also have an indirect impact on the forint. Retail investors may shift their money into other assets, such as government bonds issued in foreign currencies or foreign investments. This could reduce demand for the forint, causing further weakening. The central government debt management agency may try to introduce more attractive interest rate conditions, but higher yields on government bonds in the market could still provide strong competition.

The forint’s link to the equity market and the global economic situation

The undervaluation of the Hungarian equity market offers investors new opportunities, but the shift here does not necessarily strengthen the forint. Indeed, the increase in demand for equities is mainly driven by domestic investment, while inflows of foreign capital remain uncertain. The position of OTP, Mol and Richter shares, especially given their exposure to the Russian market, remains vulnerable to international economic influences.

Global economic trends, such as the policies of Donald Trump’s second presidential term, may indirectly influence the forint exchange rate. The US-China tariff war and protectionist US economic policies could put pressure on emerging markets, including Hungary. Problems in the European automotive industry could also affect Hungarian export performance, which could further reduce the stability of the Hungarian forint.

The outlook for the Hungarian forint is weakening in the years ahead, mainly influenced by domestic economic problems, challenges in the international environment and household investment decisions. Persistent exchange rate depreciation and inflationary pressures will further complicate the achievement of economic stability, while global trends and policy decisions will pose new risks. Coordinated action between fiscal and economic policies and the mitigation of external and internal risks would be key to improving the position of the Hungarian forint.

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Featured image: depositphotos.com

December 16, 2024

PM Orbán: ‘We are building strong countryside’

“We are building a strong countryside because without that there would be no strong Hungary,” Prime Minister Viktor Orbán said at the inauguration of a section of Route 53 bypassing Soltvadkert, in southern Hungary, on Monday.

Hungary’s government had decided as far back as 2010 that it would put an end to the internal migration seen in rural Hungary, and had set out to ensure that certain parts of the country do not have to prosper at the expense of others. “We set out to make the Hungarian countryside an attractive place where it is worth living because there are jobs and high quality services and everything is accessible within a reasonable time frame,” the prime minister said. “It isn’t right that Budapest’s level of development is at 158 percent of the European Union average, while all other regions are below the average.”

Route 53 bypassing Soltvadkert, in southern Hungary. Photo: MTI

read also: Happiness statistics: Hungary ranks among the least happy nations – Here’s why!

Orbán said the town of Soltvadkert and Bács-Kiskun County were “winners of the government’s measures”. He said the employment rate in the county has risen to 74 percent from 56 percent since 2010 while the unemployment rate has fallen to 4 percent from 10 percent. Meanwhile, the average wage has risen to 490,000 forints from 160,000, he added. He said the region would play an even more important role in the future, noting the government’s plan to set up a new economic zone in the country’s southern regions. The government has earmarked 330 billion forints (EUR 806.5m) in next year’s budget for making the southern Hungarian countryside stronger, resilient and independent, Orbán said. He noted ongoing investment projects in Kecskemet, adding that bypasses are also being built next to Szeged and Baja, with another one planned for Pécs.

Orbán said that when he last visited Soltvadkert during the European Parliament election campaign in the spring, “there appeared to be no chance for peace” in neighbouring Ukraine. Hungary, he said, had been under “tremendous pressure” from the United States for its pro-peace position, “and the pro-war Brussels bureaucrats were also giving us a thrashing”. But over the past six months, the “pro-war, anti-migration and pro-family forces” have gained a majority in the Western world, he said. Hungary’s ruling parties secured a resounding victory in the EP elections, established the Patriots of Europe party, becoming essential players in the legislative body, and in the United States “our brother-in-arms” Donald Trump was elected president, Orbán said. He said the Hungarian economy was set for a “fantastic year” in 2025, saying Hungary would emerge stronger “from the shadow of the war that has been going on for three years now”.

December 16, 2024

Future president of Hungary’s National Bank reveals key objectives and his team

The primary goal of Hungary’s National Bank is achieving and maintaining price stability; it is committed to its 3pc inflation target, Finance Minister Mihály Varga said on Monday before parliament’s economy committee as a candidate to lead the NBH.

The independence of the NBH is guaranteed by both the act on the Central Bank and the effective regulatory system of the European Union, he said. At the same time, he added that for sustainable development and a predictable economic environment, the central bank cooperates with the government and domestic and international organizations with mutual respect for their respective mandates.

Varga said that under his leadership the NBH will treat performing classic central bank responsibilities as priorities while activities outside of this will be moderated. At the meeting, Varga introduced his future central bank team members but did not disclose their expected positions. The team will include Péter Benő Banai, the state secretary for the budget, Government Debt Management Agency (AKK) head Zoltán Kurali, and state-owned Hungarian Development Bank (MFB) CEO Levente Sipos-Tompa. The committee supported the appointment of Varga as NBH Governor by a majority vote.

The committee supported the appointment of Varga as NBH Governor by a majority vote. The minister said his commitment to maintaining the 3pc inflation target is a clear and unambiguous message that helps anchor the expectations of consumers, businesses, and financial market participants. Speaking about the prospects of the Hungarian economy, Varga said the economy is on a strong foundation, inflation is within the target range of the central bank, the current account is expected this year to have a 2pc surplus compared to GDP.

The liquidity of households, companies, and the banking system is robust, and the financial system is stable. The basis for economic growth in 2025 is rising consumption, expanding retail lending, growing construction order stock, and new manufacturing capacities coming online. Monetary policy can best contribute to growth by maintaining persistently low inflation and financial market stability, he said. A stable exchange rate and financial markets are priorities for ensuring price stability. Stable and predictable exchange rate is needed for sustainable economic growth.

Varga said that under his leadership the NBH will give a decisive response to risks threatening the financial transmission system, financial stability and sustainable economic development. Varga said he will place strong emphasis on the management discipline of the central bank and ensuring that the central bank operates in a transparent and professional manner. Responding to questions regarding the central bank’s foundations and real estate assets, Varga said that the situation will be reviewed after he takes office in March.

Tax benefits change, 3rd-country guest workers will earn less in 2025 in Hungary!

Ukrainian and Serbian guest workers in Hungary should not be worried about the changes; however, Vietnamese, Indian, Kyrgyz, Kazakh, Montenegrin, Venezuelan, etc. employees will earn less if they raise children, are below 25, or get a tax benefit due to marriage.

New rules will decrease the salaries of many guest workers in Hungary

Regarding tax benefits, the Hungarian state is rather generous to families raising three or more children. On the other hand, allowances based on social status are much lower than in most European countries because the Hungarian government believes such financial help should only be given to those who work and, as a result, contribute to the country’s GDP increase.

Although the Hungarian government seemed committed to attracting guest workers to Hungary with several alleviations, a significant change is coming in 2025 thanks to the modification of tax laws in Hungary.

According to Telex, many guest workers will no longer be eligible for family tax benefits, lose the allowance for young couples in first marriage, and can no longer receive the tax benefits for employees under 25.

Hungary"s population Hungary guest workers government ban golden visa guest workers in Hungary third-country nationals' tax benefits — There are around 70 thousand unfilled positions in Hungary. Photo: **depositphotos.com**

The good news is that the modified tax rules do not apply to guest workers coming from neighbouring countries. Therefore, Ukrainians and Serbians should not be worried. However, all other citizens coming from non-EEA countries should be aware that their revenues may fall next year.

Three types of tax benefits will be unavailable

According to Telex, based on the LV. Law of 2024 about the change of several tax laws, from January, Vietnamese, Indian, Indonesian, Kyrgyz, Uzbek, Venezuelan, Montenegrin, Filipino, etc. workers may earn less. The reason is that they and all other 3rd-country nationals not coming from the neighbouring countries will no longer be eligible for family tax allowance, the allowance for young couples in first marriage, and the tax benefits for employees under 25.

Telex wrote that one of the biggest Hungarian HR companies informed its employees about the changes. That means all of them will have to pay 15% personal income tax and 18.5% social security contribution. The calculation is simple: your gross wage minus 33.5% will be your net salary paid in cash or transferred to your bank account.

This means that if a 3rd-country employee not from neighbouring countries like Ukraine or Serbia is employed for a HUF 450,000 (EUR 1,100) gross wage per month, he gets HUF 299,250 (EUR 731) even if he e.g. raises three or more kids.

Employees raising one kid will get HUF 10,000 (EUR 24) less, and that number increases to HUF 40,000 (EUR 98) in the case of two kids and HUF 99,000 (EUR 242) in the case of three kids. Young employees under 25 will receive 15% less (because they will have to pay personal income tax), while young couples in first marriage will get HUF 5,000 (EUR 12) less.

Stricter conditions to hire guest workers

Earlier this year, the Orbán cabinet introduced stricter rules concerning the employment of guest workers. First, employers punished with administrative or OSHA fines in the previous 12 months cannot hire a guest worker. Secondly, they cannot hire a guest worker from a third country if they were punished for illegally employing guest workers before. Finally, employers under compulsory liquidation, and forced strike-off cannot hire a guest worker. Moreover, if a Hungarian employer rejects to hire a Hungarian job seeker due to unsupported claims, they should expect sanctions.

According to Telex, employers believe those modifications did not prevent the growth of the number of Asian guest workers in Hungary. FM Péter Szijjártó talked about 128,000 workers from countries outside of the European Union in Hungary in October. Of course, the majority of them are Ukrainians and Serbians. Meanwhile, the number of unfilled positions stood at 71,000 then.

The increase in the number of guest workers flattened

Károly Radnai, the CEO of Andersen Adótanácsadó Ltd, agreed with the abolishment of the tax benefits for 3rd-country guest workers since the government’s aim is not to settle those employees. According to the latest data from the Hungarian Central Statistical Office (KSH), the number of guest workers in Hungary stagnated in the past few months. Telex or the KSH did not give a reason, but it is a fact that the Hungarian government is struggling with multiple structural problems, and GDP growth is expected to be extremely low this year.

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Featured image: depositphotos.com

December 14, 2024

Hungary’s industrial sector output falls due to struggling battery manufacturing sector

Output of Hungary’s industrial sector edged down 0.2pc in October, a detailed release of data by the Central Statistics Office (KSH) on Friday shows.

The detailed data show output of the automotive industry, Hungary’s biggest manufacturing sector, fell 3.9pc year-on-year in October. The segment accounted for 26pc of manufacturing output during the month.

Output of the computer, electronics and optical equipment segment, accounting for 11.0pc of manufacturing, rose 16.3pc. Output of the electrical equipment segment, which made up 9.4pc of manufacturing output, fell 16.9pc. Output of the food, drinks and tobacco segment, which made up 13pc of manufacturing sector output, climbed 2.7pc.

Adjusted for the number of workdays, headline output was down 3.1pc. In a month-on-month comparison, output was up 2.0pc, on a seasonally- and workday-adjusted basis.

According to Forbes, despite the Hungarian government’s allegations, the output of the Hungarian industry does not keep falling because of the struggling German economy but due to the malaise of the battery industry.

Construction sector output slips 0.5pc in October

Output of Hungary’s construction sector edged down 0.5pc year-on-year in October, data released by the Central Statistics Office (KSH) on Friday show. Output of the buildings segment fell 5.7pc but civil engineering output climbed 7.5pc. In absolute terms, construction sector output reached HUF 679bn in October. The buildings segment accounted for 57pc of the total.

In a month-on-month comparison, construction sector output rose 4.6pc, adjusted for seasonal and workday effects. Order stock was 31.8pc higher at the end of October than twelve months earlier. Buildings segment orders inched down 2.2pc but civil engineering orders jumped 66.0pc.

New orders dropped 44.2pc during the period. New orders in the buildings segment were down 34.5pc and new civil engineering orders fell 53.4pc. For the period January-October, construction sector output edged up 0.7pc from the same period a year earlier.

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December 14, 2024

Hungarian banks received good news from Fitch Ratings – UPDATED: new K+H Bank CEO

Fitch Ratings on Thursday affirmed the BBB long-term issuer default ratings of state-owned Magyar Eximbank and Hungarian Development Bank (MFB) and revised the outlooks on the ratings to stable from negative.

The ratings agency also revised Erste Bank Hungary’s and Kereskedelmi es Hitelbank’s (K+H Bank) outlook to stable from negative, while affirming their long term-issuer default rating at BBB+ and shareholder support rating (SSR) at bbb+.

In addition Fitch revised the outlook on MVM’s long-term issuer default ratings (IDR) to stable from negative and affirmed the IDR at BBB.

The rating actions followed the revision of the outlook on Hungary’s BBB sovereign rating to stable from negative on December 6.

UPDATE: K+H Bank to get new CEO

Belgian-owned K+H Bank announced a new CEO on Friday. Peter Roebben, the current CEO of the KBC Group’s Bulgarian unit, will take over from Guy Libot as of January 1. Peter Roebben has filled various positions at KBC since 1991. Guy Libot will fill a new senior management position within the group from February 1. 2025.

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Featured image: illustration, depositphotos.com

December 13, 2024

Mercedes-Benz to shut down production for one month in its Hungarian base

Mercedes-Benz will be shutting down production at its base in Kecskemét (C Hungary) for a winter break from December 18 until January 20, 2025, the local unit of the German car maker said on Thursday.

Mercedes-Benz shuts down for a month

Mercedes-Benz Manufacturing Hungary said that during the break the plant is undergoing significant transformation work in preparation for the production of new models based on the MMA and MB.EA platforms.

The company said Mercedes-Benz is continuously optimizing its production network in order to operate at optimal capacity and to respond to fluctuations in demand using the available flexibility.

The Mercedes-Benz Group achieved stable sales in the third quarter despite model changes, a challenging market environment and tough competition, especially in China, it added.

Mercedes-Benz Manufacturing Hungary had EUR 5.1bn revenue last year. Headcount at the unit averaged 4,477 in 2023.

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Featured image: depositphotos.com

December 12, 2024

Happiness statistics: Hungary ranks among the least happy nations – Here’s why!

Many people think of happiness as an abstract feeling, but in reality, there are many concrete factors that influence how satisfied we are with our lives. NN Longevity’s research shows that happiness levels in Hungary are not only low but have continued to decline in recent years.

The results of the NN Longevity research show that there is a strong link between happiness and financial security. The level of happiness among the Hungarian population is low not only in comparison with Western Europe but also with neighbouring countries. The average score on a 10-point scale is only 5.4 in Hungary, below 6.4 in Romania, for instance.

Happiness Hungarians Statistics — Source: Pixabay

According to Pénzcentrum, this figure suggests that the state of mind of the country’s inhabitants is among the worst in the region. The picture is even more pessimistic when it comes to the outlook for future happiness, whereas Hungary also comes bottom. While Hungarian respondents expect to be 5.9 points happier in ten years’ time, the figure is much higher in the rest of the region, with Romanians, for example, predicting a score of 7.

Different factors in happiness

The research shows that happiness does not simply decline with age. Although young people aged 18-34 are the happiest, with an average score of 5.8, they are not followed by middle-aged people. Those aged 50-64 were slightly happier than those aged 35-49, who scored an average of 5.3.

However, this group, which should traditionally be at the height of their careers and financial stability, is carrying a heavier burden than expected. The least happy generation is the over 65s, with a happiness score of just 5.2. This finding suggests that financial and health insecurity in old age has a major impact on quality of life.

The analysis also shows that financial stability plays a crucial role in happiness. Hungarian respondents who have at least six months’ savings feel significantly happier than those who have no savings. A sense of financial insecurity significantly reduces happiness levels: those with no more than three months’ savings scored an average of 4.8 points, while those with six months’ savings scored 6.4 points.

According to Portfolio, respondents also showed a significant difference in their self-assessment, with those with money set aside giving themselves an average score of 6.7, compared to an average of 5.1 for those without a reserve. This suggests that financial stability is a key determinant not only of financial welfare but also of psychological well-being.

The research also revealed that for Hungarians, a happy and meaningful life is based on several components, one of the most important of which, according to respondents, is reducing stress and achieving calmness, which is essential for a balanced life. They also highlighted the importance of spending time with loved ones, which strengthens emotional bonds, and a healthy lifestyle, which is central to maintaining physical and mental well-being.

Financial factors are also crucial: current financial well-being and future financial security are essential for people to feel balanced and satisfied. Longer life expectancy places particular emphasis on preparing for the future, as financial security in old age is essential for a comfortable life.

The challenges of retirement

According to the survey results, 63% of Hungarians consider financial security to be an essential condition for retirement. However, the majority of respondents feel that they are not doing enough to create financial security for their retirement. Only one in five Hungarians save regularly for retirement, suggesting that long-term financial planning remains a low priority for the majority of people. This low propensity to save is likely to exacerbate concerns about the future and contribute to Hungarians’ lowest levels of happiness in the region.

Retirement Happiness Hungarians Statistics — Source: Pixabay

NN Longevity’s research has clearly shown that happiness is not solely dependent on subjective factors. Financial stability, stress reduction, a healthy lifestyle and the cultivation of social relationships are all essential elements that can contribute to a balanced and satisfying life. In the case of Hungary, it would be particularly important for people to place more emphasis on long-term financial planning, as this has a major impact not only on current but also on future levels of happiness.

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December 12, 2024

Government county commissioner tells Budapest Mayor Karácsony to ‘comply with law’

The government commissioner of Budapest has told the city’s mayor, Gergely Karácsony, to comply with the law and desist from pushing through an “unlawful budget”.

Government commissioner calls on Karácsony

Botond Sára said in a video uploaded to Facebook that Karácsony should refrain from pressing ahead with his “next unlawful measure”, accusing him of working to push an “unlawful budget” through the city assembly, saying “he doesn’t want to pay the 50 billion forints” [EUR 121.3m] in solidarity tax “that poorer localities are entitled to”.

“This is no solution to the municipality’s plight, which is close to insolvency,” Sára said. He said Karácsony was “playing for time” and this would worsen the city’s already difficult situation. “Of course, we will challenge [any] unlawful decision.”

In response, Karácsony said in a post on Facebook that a government office challenge against the Budapest budget would put the municipality’s operations at risk.

“This means, no less, that the government wants to force the city into insolvency,” he said.

He said the government office was running afoul of a municipal court decision that said “over-taxing Budapest is tantamount to confiscation”. “The government insists on taxes which the Constitutional Court has said are contrary to the right of local authorities to financial autonomy enshrined in Hungary’s Fundamental Law,” he said.

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December 10, 2024

Hungarian national economy minister sees rebound in 2025 – UPDATED

National Economy Minister Márton Nagy said 2025 would be a “rebound” year of “economic recovery”, supported by a “peacetime budget”, testifying before parliament’s economy committee on Tuesday.

National Economy Minister expects economic recovery in 2025

Nagy said the government had responded successfully to the crises of the past five years: the pandemic, the energy crisis caused by the war and the economic downturn in Germany.

In light of the changed economic circumstances, the government has launched an economic policy action plan, founded on a policy of economic neutrality, that aims to aid the domestic recovery and lift GDP growth over 3pc from 2025, he added.

Nagy said that action plan would pump HUF 1,400bn into the business sector and leave households with more than HUF 2,800bn.

Nagy said tourism and retail data indicated a recovery of domestic consumption in 2024 that would continue in 2025. He added that real wages could grow 9pc this year, while the employment rate stood at 84pc, close to full employment.

Nagy said the construction sector would bounce back, with an order stock up 40pc and government measures set to lift the housing market. He added that home builds could double to 25,000 next year, still under the 40,000-unit potential of the local construction sector.

Nagy blamed Berlin’s overly disciplined fiscal policy and spending on ideologically important goals, rather than economic development, for the downturn in Germany. He added that the German government’s decision to roll back EV subsidies was also damaging.

Fielding questions, Nagy said dormitories with capacity for 13,000-20,000 students could be built in a student quarter in a brownfield area in the south of the capital. The government aims to keep the number of beds reserved for foreign students under 30pc, he added.

Nagy said the state would recoup the price it paid for a controlling stake in Liszt Ferenc operator Budapest Airport in 15 years.

Márton Nagy minister national economy — MTI/Soós Lajos

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December 10, 2024

Orbán cabinet: Budapest ‘can’t get out of paying taxes’

The Budapest municipality is going against the Constitutional Court’s decision, which in October rejected Budapest’s proposal that the solidarity tax the municipality was called on to pay to support poorer localities was unconstitutional, a state secretary of the finance ministry said on Monday.

State secretary András Tállai said that this year, 848 “wealthier” localities paid a solidarity contribution to aid 1,250 localities in performing their tasks. “It is peculiar that it is the richest city of the country, the capital, that finds supporting poorer localities difficult,” Tallai said.

Tallai said government support for local authorities will increase to 1,266 billion forints (EUR 3bn) from 1,050 billion this year, and additional funds will flow into wage costs.

In reaction to Karácsony’s statement that the city would not pay some 50 billion forints in solidarity contribution, Tállai said,

“Everyone has to comply with the law.”

Last week, Budapest Mayor Gergely Karácsony said that in a bid “to retain the municipality’s self-determination and resources,” the city’s budget had been drafted on the assumption that

“Budapest will pay as much solidarity tax to the central budget as it receives from central coffers to finance its services.”

UPDATE

Karácsony: Budapest’s real problem is ‘no money’

Gergely Karácsony, the mayor of Budapest, told a conference on Monday that the capital’s “real problem” was that the municipality had “no money”.

Karácsony said at the Republikon Institute gathering that it was not especially the political gridlock in the assembly or the fact it had been impossible to appoint a deputy mayor that was holding the city back, but rather that it was in the midst of an economic crisis and had fallen victim to a government policy of blackmail.

He said the city assembly was a battleground between its biggest factions, Fidesz and the Tisza Party, both of which exploited Budapest affairs to position themselves ahead of the 2026 general election.

Recent months had shown that

“Fidesz votes no to everything”, so decisions can only be made with the ten-member Tisza faction.

Karácsony said it would be hard to overcome the gridlock if local politicians focused solely on the city’s affairs as even then “the lightning of national politics strikes above us”.

Budapest Mayor Karácsony urges Orbán to address housing crisis as rent prices soar

December 9, 2024

Hungarian government achieves fiscal balance stabilization this year

The Finance Ministry released preliminary data on Monday showing that Hungary’s cash flow-based general government deficit reached EUR 8bn (HUF 3,284.3bn) at the end of November.

At the end of the month, the central budget had a deficit of HUF 3,257.5bn, the social security funds were EUR 0.55bn(HUF 226.8bn) in the red, and separate state funds were HUF 200.0bn in the black.

Alone in November, the general government deficit came to HUF 233.8bn.

“The government has stabilised the fiscal balance this year while closely following the development of the deficit,” the ministry said. “The government remains committed to improving balance indicators while putting the economy on the sustainable growth path,” it added.

The ministry said interest expenditures reached HUF 3,412.7bn in January-November, climbing by HUF 798.1bn from the base period. It noted that the fall in forint interest rates started in 2023 was delayed in showing up in cash flow-based interest expenditures.

It added that accrual-based interest expenditures will decline substantially in 2025.

The ministry reaffirmed the government’s commitment to reducing the general government deficit to 4.5 percent in 2024, 3.7 percent in 2025, and under 3 percent in 2026.

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

December 9, 2024