Trade in Hungary

Authority: EU hindering ‘legislation to protect youth’

elf bar e-cigarette

Hungary’s authority in charge of regulated activities (SZTFH) has launched a campaign against the illegal trade of e-cigarette Elf Bar and other herbal products, but “Brussels bureaucracy is hindering passage of a relevant package”, SZTFH told MTI on Thursday.

In its statement, the authority said that an EU committee had turned down its appeal for an expedited procedure to deal with the matter, adding that “despite this bureaucratic move SZTFH will continue to use every legal means to restrict smoking among juveniles and to protect their health as well as the legal [tobacco] market”.

The authority noted that herbal products used as an alternative to smoking tobacco were gaining popularity, and were distributed outside legal tobacco retail outlets. They can also be purchased via the internet and were “freely accessible to young people”, it said.

The authority said the illegal trade of Elf Bars was a challenge, while young consumers were its primary risk group. National tax authority NAV is preparing for crackdowns to remove the product from the market, while SZTFH will launch a campaign in summer camps, and in primary and secondary schools from September on, the statement said.

snack muesli food cereal breakfast
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Audi to build new electric engine plant in Hungary

audi

Audi is investing 120 billion forints (EUR 301m) to build a new plant turning out electric motors for Volkswagen Group cars in Győr, in north-western Hungary, Péter Szijjártó, the minister of foreign affairs and trade, announced on Tuesday.

The investment, which is supported by a 8.5 billion forint (EUR 21m) government grant, will create 500 jobs, he said, adding that production is slated to start in 2025.

The plant will turn out multiple parts for innovative MEB ECO electric motors designed for smaller Volkswagen Group vehicles, he said.

In his speech at the event, Szijjártó said car manufacturing had developed by leaps and bounds in the past twelve years in Hungary, becoming the “backbone of the Hungarian economy”.

The sector’s production value was 9,400 billion forints in 2021, up from 3,600 billion in 2010, he said. Despite global economic challenges, it reached 3,500 billion forints in the first four months this year, and 158,000 Hungarians are employed in the sector, up from 86,000 in 2010, he added.

With 90 percent of production exported, Hungary is the 20th biggest car exporter in the world, he said.

Audi is one of the largest players in the field, employing 13,000 Hungarians and ensuring livelihoods for some 25,000 families, he said.

Audi, which turned out a record 171,000 cars in Hungary last year, has aided Hungary’s government in “a revolutionary transition of the automotive sector” by starting the mass production of electric motors in 2018, he said.

German investors employ some 300,000 people in Hungary, and bilateral trade between the two countries has reached a record 60 billion euros, he said.

As we wrote last year, the launching event of the mass production of Mercedes’s electric EQB SUV in Kecskemét Szijjártó said the 50 billion forint (EUR 1.4bn) investment, supported by a 15 billion government grant, details HERE.

KAMAZ Electric Truck
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Hungary’s industrial output up 3.1 pc yr/yr in April

Hungarian industrial output grew by an annual 3.1 percent in April, slowing from 3.6 percent in the previous month, the Central Statistical Office (KSH) said on Tuesday in a second reading of data.

Month on month, output fell by 1.6 percent, based on seasonally and working day-adjusted data.

In January-April, industrial output increased by 4.9 percent from the same period a year earlier.

Output of automotive companies, accounting for 21 percent of manufacturing sector output in April, dropped by an annual 7.1 percent, KSH said.

The detailed data show output of the computer, electronics and optical equipment segment, accounting for 10 percent of manufacturing, increased by an annual 4.9 percent.

Output of the food, drinks and tobacco segment, which made up 12 percent of manufacturing sector output, rose by 11.9 percent.

M0 Hungary Budapest traffic cars transport hungarian motorway
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Oppisition DK calls for zero pc VAT for basic foods

downtown market budapest-8-meat-butcher

The opposition Democratic Coalition has called on ruling Fidesz to vote for its earlier proposal cutting VAT for basic foodstuffs to zero percent.

DK spokesman Balázs Barkóczi told an online press conference on Monday that food prices had jumped by 25 percent in May. Citing the magazine G7.hu, Barkóczi said

the price of cheese, butter, pork, pasta and another 30 items had grown significantly last month, and the cabinet’s “window dressing” has failed to stop rising prices, he said.

Fidesz reaction

Fidesz said in a statement in response that had it been up to Ferenc Gyurcsány, DK’s leader, then prices would have risen four-fold, as the left-wing would have scrapped the price cap on household utility bills and caps on vehicle fuels and basic foods.

Also, electricity prices would more than triple, while natural gas would increase more than five-fold, the statement said.

Gellérthegy Gellért Hill Budapest view kilátás
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Passenger transport up and freight down in the Q1 in Hungary

M0 Hungary Budapest traffic cars transport hungarian motorway

The volume of passenger transport in Hungary rose by an annual 69 percent in the first quarter, to 4.9 billion passenger-kilometres, but was still 27 percent under the volume in the same period in 2019, the Central Statistical Office (KSH) said on Monday.

Passenger transport

Bus travel accounted for 49 percent of all passenger-kilometres, while rail made up 32 percent and air travel 19 percent.

The data do not include local transport.

The number of passenger-kilometres registered for local transport in Hungary rose by 49 percent to 1.6 billion during the period.

Public transport in the city of Budapest alone accounted for close to 1.2 billion of those passenger kilometres.

Freight transport

Freight transport performance was 13.6 billion tonne-kilometers, down 4.6% year-on-year and 11% compared to the first quarter of 2019. Domestically, performance was 1.2% lower year-on-year, while internationally it was 7.2% lower.

Domestically, rail and inland waterway freight transport performance decreased, while other modes increased, with road freight transport accounting for the largest share (80 percent), up 1.6 percent.

Road freight transport, which also accounts for the largest share of international transport, was 4.9% down on the first quarter of last year, while rail freight was 14% down.

KSH: Hungary trade balance shows EUR 475 m deficit in April – UPDATE

Hungary economy recovery moody's

Hungary’s trade balance showed a 475 million euro deficit in April, the Central Statistical Office (KSH) said in a first reading of data released on Wednesday.

Hungary, an export-driven economy where trade surpluses are the norm, had a trade deficit for the tenth month in a row, KSH said.

Exports rose by an annual 12.1 percent to 11.052 billion euros and imports climbed by 21.1 percent to 11.527 billion.

Trade with other European Union member states accounted for 77 percent of exports and 70 percent of imports.

Further deterioration expected

Magyar Bankholding chief analyst Gergely Suppan said with growing investments and consumptions the foreign trade balance is expected to deteriorate further, but in the second half of the year it could stabilise with the easing of the global chip shortage and new production capacities coming online. Because of the war in Ukraine, the trade balance could end up being negative for this year, after a 1.9 billion euro surplus in 2021, he added.

Századvég chief macro analyst Gábor Regős said the weakness of the automotive sector is proving to be a drag on export growth, while also noting that consumption and investments are boosting imports.

Regős said price changes are also affecting the trade balance, as import prices are growing at a faster rate than export prices, because of a boom in global energy prices.

Erste Bank macroeconomic analyst János Nagy said monthly trade figures should show a deficit in the short term. Until the difficulties of the automotive sector lessen, goods export will not be able to grow dynamically. The rise in energy costs becoming persistent pose a downside risk, but starting in H2 exports could start catching up to imports with the global economy recovering and through the huge capacity expansions already announced, he added.

hidvéghi balázs fidesz mep
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Staple food shortages in Hungarian Lidl supermarkets?

lidl_hungary

The Hungarian Government has recently stated that the price cap period would last until 1 July. Fear in the general public arose: customers worry that they will not be able to buy basic staple food items in their local supermarkets due to retailers buying up price-capped products. Read below for more details.

According to Portfolio, retailers have already caused significant staple food shortages in Hungarian supermarkets since they purchase price-capped items – such as sugar, vegetable oil, and chicken breasts – in large bulks. This practice consequently caused a disruption in the shipping process of such food items. One solution proposed by an insider is that supermarkets introduce a double pricing system – one that allows contractors to reclaim the 27% tax on the price-capped products, such is the case at petrol stations – but it is a complicated process that would require a lot of work. 

Lidl chains in Hungary will take drastic measures against wholesalers. Soon, Lidl will not allow such customers to purchase price-capped products in their stores.

The reason why restaurants, small retailers, and confectioneries gravitate towards supermarkets is their attractive reduced prices which are considerably lower than the market prices. To prevent product shortages, retailers have only allowed regular household-quantity purchases for customers. However, non-residential customers continued to purchase cheaper food articles in supermarkets, reducing the amount they bought but increasing the frequency of their purchases.

Portfolio predicted a 20 to 30 percent price increase for the currently price-capped products once the regulations will be lifted. The fact that the price cap is still in place until the middle of summer means that certain food products remain cheaper, while the market price of such items will continue to skyrocket, creating a significant pricing difference. 

This is the very reason why Lidl took the necessary actions to prevent shortages and be able to continue the distribution of basic necessities for residential customers.

Hungarian companies with innovative technologies to find new opportunities in Morocco, says minister

morocco hungary

Trade between Hungary and Morocco jumped by 24 percent in the past year, and the growing economy of the region offers good prospects for Hungarian companies, Finance Minister Mihaly Varga said after meeting his Moroccan counterpart, Nadia Fettah Alaoui, in Morocco on Wednesday.

Trade between the two countries reached 260 million dollars last year, Varga said after the talks on the sidelines of the general assembly of the European Bank for Reconstruction and Development (EBRD).

Hungarian companies with innovative technologies and products will find new opportunities in Morocco, Varga said.

Hungarian exports of electrical equipment and vehicles there is significant, the finance ministry quoted Varga as saying.

The aim is to boost ties in water management, farm and food processing technologies, energy management and property development, Varga said.

The cooperation agreement concluded between the Hungarian and Moroccan customs and tariff authorities will also contribute to the development of ties, as will the Morocco-Hungary Business Council, which is scheduled to start work in the near future, he said.

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Annual inflation in Hungary almost in double digits in April

shopping store

Consumer prices in Hungary grew by an annual 9.5 percent in April, up from 8.5 percent in the previous month, the Central Statistical Office (KSH) said on Tuesday.

Food prices rose by 15.6 percent as the price of bread and poultry both jumped by 29.5 percent and dairy products prices climbed 22.5 percent.

Prices in the category of goods that include vehicle fuel rose by 10 percent, with vehicle fuel prices up 12.7 percent.

Prices of spirits and tobacco products increased by 5 percent.

Harmonised CPI adjusted for better comparison with other European Union member states was 9.6 percent, while core inflation, which excludes volatile fuel and food prices, was 10.3 percent.

CPI calculated with a basket of goods and services used by pensioners was 9.3 percent.

Month on month, inflation was 1.6 percent.

Analysts told MTI after the data release that the price shock related to the war in Ukraine turned up April rather than March, when inflation came in lower than expected, and April’s jump came as a big surprise. Analysts now expect higher and more persistent inflation compared with their previous forecasts.

Péter Virovácz of ING Bank said the April shock came on the back of broad and growing inflationary pressures linked mainly to geopolitical events and movements on the global market. Inflation is likely to strengthen further, and the headline rate may soon enter into double digits, he said, even with price caps in place. Inflation may peak above 11 percent in the third quarter, he added.

János Nagy of Erste Bank said the April figure as “sobering”, reflecting inflationary effects of the war and the greater vulnerability of the forint. The labour market is still tight with resultant huge wage pressures. Nagy also noted the fiscal expansion in recent months and higher-than-expected oil prices.

Gergely Suppán of Magyar Bankholding said inflation could easily reach 14-15 percent without the government-mandated price caps. Magyar Bankholding has raised its inflation forecast to approaching 9 percent for the full year, though inflation may be even higher due to raw materials shortages and other global squeezes, he said.

Hungary’s central bank (NBH) said in a monthly analysis after the data release that the increase in headline inflation was mainly driven by higher prices for core inflation items, but acknowledged that vehicle fuel prices contributed 1.4 percentage point to CPI.

The NBH’s measure of core inflation excluding indirect tax effects — a bellwether of underlying inflation — rose to 10.3 percent in April from 9.1 percent in the previous month.

The central bank’s indicator for demand-sensitive inflation, which excludes processed foods from core inflation, increased to 8.8 percent from 7.9 percent.

The NBH said the indicators measuring households’ inflation expectations “showed unusually high volatility”, rising in April and standing over the central bank target range.

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Hungary and Uzbekistan launch cooperation programmes in nuclear energy, water management, agriculture

Szijjártó uzbekistan

Hungary and Uzbekistan will launch large-scale cooperation programmes in the fields of nuclear energy, water management, agriculture and border control, creating opportunities for Hungarian companies in that rapidly developing Central Asian nation, Péter Szijjártó, Hungary’s minister of foreign affairs and trade, said in Tashkent on Wednesday.

Uzbekistan has launched ambitious development projects in areas with cutting-edge Hungarian technologies in place, the foreign ministry quoted Szijjártó as saying at a press conference after the seventh session of the two countries’ inter-governmental committee for economic cooperation.

Hungary is set to contribute cooling technology for a new nuclear power plant in the framework of a 300-400 million euro project, as well as help train Uzbek nuclear experts, he said.

Hungary has agreed to grant scholarships to 170 Uzbek university and college students, up from one hundred thus far, the minister said.

Nuclear energy has a key role to play in Hungary’s secure energy supply, and determining the energy mix is a national competence, Szijjártó said, noting the European Union had consistently declared nuclear energy’s full exemption from sanctions on Russia.

Referring to the Afghan border, the minister said:

“Europe has a vital interest in preventing further waves of migration that could promote the spread of terrorism and extremist ideologies.”

On this score, he said

the European Union should double the amount earmarked for border defence efforts in Central Asia.

Concerning water management and agriculture, the minister noted that Turkic Council member states have agreed to establish an institute tasked with preventing drought.

Bilateral trade exceeded 110 million dollars last year and increased by 48 percent his year, Szijjártó said, adding that

Hungary’s Eximbank had opened a 105 million euro credit line to help finance bilateral business cooperation.

The two sides have signed a supplementary protocol on the Stipendium Hungaricum scholarship programme and a declaration of intent on tourism cooperation.

Szijjártó was scheduled to meet his Uzbek counterpart, the deputy prime minister for investments and external economic relations, and the ministers of health, innovative development, higher and secondary education, tourism and cultural heritage later in the day.

Hungary March retail sales up 16.2 pc yr/yr

Retail sales in March grew by an annual 16.2 percent from a low base, the Central Statistical Office (KSH) said on Wednesday.

Calendar-year data also showed 16.2 percent growth.

Food sales increased by 0.2 percent, non-food sales by 29.7 percent, while vehicle fuel sales jumped by 51.4 percent.

Commenting on the data, analysts said that retail sails had grown on the back of bonuses and tax refunds paid in February, fuel tourism induced by the government price cap, the low base, and inflation expectations.

Gergely Suppán of Magyar Bankholding said retail turnover exceeded expectations in March. One-off government measures such as the PIT refund for families raising children, the 13th month pension, and allowances for service members boosted already robust wage growth, which was around 13 percent, he said. Retail sales grew on the back of price caps on fuel and basic foods near the border, where it boosted shopping tourism, he said. In view of those tendencies, Bankholding expects retail growth to be above 10 percent this year, he said.

Péter Virovácz of ING Bank said the two-digit jump in retail sales came after a rise of 7.3 growth in 2021, indicating that, besides the low pandemic-related base, other factors such as fuel tourism, aid to and consumption by Ukrainian refugees, and inflation expectations may have played a role. He said the March data were likely indicative of a blip rather than structural change, though growth at this level was “definitely unsustainable” and would raise first-quarter GDP greatly, he said.

Hungary trade balance shows EUR 117 m deficit in Feb

Hungary’s trade balance showed a 117 million euro deficit in February, the Central Statistical Office (KSH) confirmed in a second reading of data released on Monday.

Hungary, an export-driven economy where trade surpluses are the norm, had a trade deficit for the eighth month in a row, KSH said.

Exports rose by an annual 18.7 percent to 11.500 billion euros and imports climbed by 30.5 percent to 11.617 billion euros.

Trade with other European Union member states accounted for 76 percent of exports and 70 percent of imports.

Hungary’s terms of trade deteriorated by 7.1 percent during the period as the forint edged up 0.3 percent to the euro but weakened by 6.3 percent against the dollar.

Read more about Hungary’s budget

Hungary’s seasonally-adjusted PMI climbs to 58.9 in April

Hungary’s seasonally-adjusted Purchasing Managers Index (PMI) rose to 58.9 points in April from 57.6 in March, the Hungarian Association of Logistics, Purchasing and Inventory Management (Halpim) said on Monday.

A PMI over 50 signals expansion in the manufacturing sector.

Among the PMI sub-indices, the new orders index climbed from the previous month and remained over 50.

The production volume index also rose and stayed over the 50-point mark.

The employment index increased, and showed growth.

Delivery times were longer than in March.

The gauge of purchased inventories rose at a slower pace and was over the 50-point mark.

Hungary, Turkey set up joint economic and trade committee

Hungary, Turkey set up joint economic and trade committee

Hungarian Foreign Minister Péter Szijjártó and Turkish Trade Minister Mehmet Mus signed the founding statement of a new Hungarian-Turkish economic and trade committee in Ankara on Tuesday.

Addressing a joint press conference after the signing, Szijjártó said exports had reached record levels in both Hungary and Turkey in 2021.

Exports came to 209 billion euros in Turkey and 119 billion euros in Hungary last year, the minister said.

This puts Hungary’s export performance 34th in the world, even when it is ranked 95th by population, he said.

Bilateral trade turnover reached a record 4 billion dollars in 2021, a 15 percent increase over the 2020 figure, Szijjártó said.

Hungarian exports to Turkey came to 2.5 billion US dollars last year, up 21 percent from 2020, Szijjártó said.

As regards the development of Hungarian-Turkish economic cooperation, Szijjártó said the two countries had set up an operative working group with a view to boosting economic and trade cooperation. Also, the Hungarian government is supporting a 100 billion forint (EUR 266.5m) investment by Turkey’s Sisecam Group in Kaposvár, in south-western Hungary, with a 14 billion forint grant, he said. Meanwhile,

Hungary’s Eximbank has opened a 105 million euro credit line to help finance Hungarian-Turkish business cooperation.

Szijjártó noted that Hungarian health industry producer Medicor was building a neonatal incubator plant in Turkey with the support of the Hungarian government, adding that the government was helping Hungarian businesses expand into the Turkish market in the areas of water management, the printing industry and the construction of power plants.

On another subject, Szijjártó noted that 50 Turkish customs officers were posted on the Hungary-Romania and Hungary-Serbia borders in order to ensure the smooth flow of freight traffic. He also noted that the Turkish, Bulgarian, Serbian and Hungarian ministers in charge of transport will establish a railway working group after east-west shipping faces significant challenges and has become partially impossible because of the situation in Ukraine.

Szijjártó also said that

because of Turkey’s expanding role on the global political and economic stage, Hungary will increase its diplomatic staff in Ankara.

Read more news about Turkey and Hungary relationship.

As we wrote today, Cornerstone laid for the new 3,000 sqm Hungarian Embassy in Ankara, details HERE.

Good deal for the Hungarian government: petrol tourism has boosted vehicle fuel sales

MOL petrol station

Vehicle fuel sales in Hungary climbed in the double digits in the first quarter from the same period a year earlier, the Tuesday issue of business daily Világgazdaság said, citing figures of the Hungarian Petroleum Association (MASZ).

Petrol sales climbed by 29.5 percent to 383 million litres, while diesel sales increased by 36.7 percent to 712 million litres.

Even excluding the effect of the low, pandemic base, vehicle fuel sales rose by around 20 percent, the paper said, pointing to petrol tourism as the “main reason” for the increase, MASZ secretary-general Otto Grad told the paper.

The maximum price for normal quality is HUF 480 per litre, while premium fuel costs the market price, which is now close to HUF 690 for petrol and HUF 790 for diesel, according to holtankoljak.hu. As a result, sales of 95-grade petrol rose by 40 percent in the first quarter, while premium petrol fell by 12 percent.

The “whites” have lost their price advantage

The Independent Association of Petrol Stations (FBSZ), which brings together smaller, so-called “white” petrol stations outside MÁSZ, does not compile sales statistics, but they feel their sales are declining, Gábor Egri, president of the association, told VG.

The small stations have lost their price advantage over the big ones with the introduction of the price cap.

“It’s no longer worth driving off the motorway for a cheaper white pump, because you can fill up for the same price at the track at petrol stations advertised by OMV as Austrian quality, by Shell as Formula 1 and by Mol as shops,” he said. Incidentally, the FCO has still not received a reply from the Ministry of Innovation and Technology to its question about the means by which service stations can prevent unauthorised drivers from filling up with fuel from the price cap.

Price cap until May 15?

Hungary’s government temporarily capped retail petrol and diesel prices at 480 forints (EUR 1.28) per litre from November 15 to ease accelerating inflation. Petrol price stop expected to last until 15 May.

This is how the Hungarian government would prevent grain prices from rising

agriculture-hungary

The government’s recent decision to allow the imposition of controls on wheat exports under certain circumstances could prevent prices from soaring, daily Magyar Nemzet reported on Tuesday.

The paper noted that supplies were currently smooth, adding that the measure could ensure that domestic demand is met “even in the most difficult situations”.

Századvég analyst Gábor Regős told the paper that under the government’s measure, the minister of agriculture is empowered to halt exports when necessary rather than imposing a full ban. He said

the country had a large surplus of wheat, barley, and maize, and “a full ban would cause serious losses of revenue to the sector”.

Exports will be allowed unless the security of supplies is compromised or prices soar, he added.

There is worry on international markets concerning a prospective halt in wheat exports by Ukraine and Russia. Regos said the impact of the war on Ukraine’s agricultural production could not be forecast yet.

Zsófia Potsa, general secretary of the association of grain producers and traders, said the government measure had come by surprise, but added that domestic supplies were not at risk.

“Hungary produces more wheat than it consumes each year, and supplies for the domestic market have been ensured even in the worst years,” she said.

Shell to restrict fuel purchases in Hungary!

shell

In its network of 191 gas stations in Hungary, Shell Hungary has introduced a restriction on the purchase of fuel at the ten stations most used by international freight traffic.

Stations next to the main transit routes are mostly affected

The ten selected stations are situated next to the main transit routes. The decision was justified by increased demands.

In the recent period, especially in recent weeks, due to the price cap on petrol prices introduced by the Hungarian Government, demand has increased dramatically, writes napi.hu. Compared to the same period last year, there was already a strong increase in turnover in January, and in February petrol stations expect a further increase as well.

The Hungarian government has capped the petrol price at HUF 480 (EUR 1.35), above which no higher price can be set. The measure was introduced on 15 November 2021 and then extended in February for 3 months, until 15 May 2022.

Cheaper fuel in Hungary than in neighbouring countries

Freight carriers and refuelers who purchase large batches of fuel have already started frequenting only the stations that are typically used by locals. The number of foreign passengers and truck customers has also increased significantly. Due to the introduced price cap and the market situation, the price of petrol is more expensive in many of the neighboring countries, such as Austria or Slovakia. Those crossing the country often refuel their buses or trucks in Hungary, causing significant problems for these gas stations. Many stations find it challenging to keep their business profitable until the price cap is in order, and some stations may close temporarily or permanently.

The number of intraday purchases is still not limited at these stations, only the one-time quantity that can be dispensed from the well column, says 444.hu. The measure affects less than 10 per cent of Shell’s network, with only motorway stations. The measure introduced on Tuesday is valid until revoked.

The stations involved are:

Székesfehérvár M7 highway A
Székesfehérvár M7 highway B
Tata M1 highway A
Tata M1 highway B
Gelej M3 highway A
Gelej M3 highway B
Lajosmizse East
Lajosmizse West
Balatonkeresztúr M7 highway A
Balatonkeresztúr M7 highway B

Hungarian minister meets Electrolux, Ericsson heads in Stockholm

sweden swedish flag hungary flag

Swedish investments are bringing future technologies to Hungary while contributing to the country’s long-term growth, Péter Szijjártó, the minister of foreign affairs and trade, said after meeting executives of Electrolux AB and Ericsson in Stockholm on Tuesday.

The 170 Swedish companies currently employing over 150,000 people in Hungary are important players in the transformation of its economy, and their cutting-edge technologies are an important factor in its future success, he said.

“Hungary’s government has created a friendly tax environment, and it supports investments that attract investments with high value-added, cutting-edge technologies, and large R and D content to Hungary,” he said.

Electrolux, which has been present in Hungary for thirty years, is embarking on its largest investment yet in Nyíregyháza, in eastern Hungary, where a 35 billion forint (EUR 98m) development will create a plant manufacturing smart fridges, he said.

Ericsson is developing a 6G network with the help of its engineering team in Hungary, and continues to bring R+D capacities to the country, he said.

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