Trade in Hungary

The proportion of foreigners in the Hungarian economy has decreased

budapest hungary

Viktor Orbán, the Prime Minister of Hungary, launched the opening of the financial year over the weekend. The goal is the continual growth of the Hungarian economy. However, according to Orbán, Hungary must avoid five types of trap situations.

Five trap situations 

When examining an economy, five different trap situations can be identified. Hungary must avoid these if it is to achieve a successful economy. These five trap situations are:

  • a trap of high foreign ownership
  • the trap of dominance of large exporting companies
  • negative profit balance trap
  • the trap of duality
  • a trap of rural backwardness.

Prime Minister Viktor Orbán highlighted the danger of a high share of foreign ownership.

The high share of foreign ownership in Hungary was significant for the first time in the period before 2010. In the 2010s, the share of foreigners in the Hungarian economy decreased slightly, from 51.6 per cent to 49.2 per cent writes vg.hu.

There are currently 14,000 foreign companies operating in Hungary.

Foreign ownership in Hungary

The role of foreigners in the domestic economy has decreased. We can also see this in terms of sales and investment. However, the share of foreign exports is increasing.

The share of Hungarian-owned companies in the media, energy and banking sectors also increased.

While in 2010, for example, the role of Hungarian ownership in energy was below 29 per cent, in 2020 it was already 56 per cent. Similar significant growth can be observed in the banking sector. It stood at 40 per cent in 2010, while by 2020, 58 per cent of the banking sector was domestically owned. The Hungarian ownership share increased in several key sectors. 

The proportion of Hungarian companies is also between 50-70 per cent in trade, food production and tourism.

At the end of 2020, the Hungarian ownership share in the human health and social care sector, construction and transport was over 70 per cent.

Overall, it can be said that great progress can be observed in gaining Hungarian ownership, writes index.hu. Progress is clear in key sectors, but there is still room for growth in others.

Orbán cabinet: Planned EU ban on red meat, wine promotion ‘unacceptable’

red meat beef

A European Commission plan to prohibit the promotion of red meat and wine in the bloc is “unacceptable”, a state secretary of the Hungarian agriculture ministry has said.

“Brussels is not seeking solutions,” Zsolt Feldman told Hungarian public media in Brussels late on Monday after a meeting of EU agriculture and fishing ministers.

He said the Hungarian government had been helping struggling swine farmers with subsidies totalling 4 billion forints (EUR 11.2) at the height of the crisis brought about by the pandemic.

Restricting the promotion of red meat and wine “will not promote healthy lifestyles or sustainability”,

Feldman said. “Societies are able to shape their own dietary habits without artificial methods invented by bureaucrats in Brussels.”

The EU “has more and more initiatives based on ideologies rather than supported by impact studies, which could lead to shrinking production,” he said.

Feldman said 19 “reasonable” countries had expressed disagreement with the planned restrictions, and he suggested that the planned measure may contribute to “food production being shifted to third countries, jeopardising the security of supplies to the EU”.

Read also40-50% of Hungarian restaurants will fail and close

Ban on single-use plastics yields significant results in Hungary

shopping plastic bag

The ban on single-use plastic products introduced in Hungary last year has yielded significant results, the daily Magyar Nemzet said on Tuesday, citing the state secretary for the development of circular economy, energy and climate policy.

Attila Steiner said most companies’ stocks of single-use plastic products had run out since the ban entered force on July 1, 2021. Retailers have adjusted to the changes well, switching from plastic bags to bio-degradable materials, with many paper and catering companies introducing paper plates and wooden cutlery.

“Online surveys show that people agree with the restrictions and … have found alternative solutions,” he said.

Discarded plastic bags have a noticeable impact on the environment, and an initiative dubbed Let’s Clean the Country and an application for revealing illegal waste dumps has been introduced to address this problem, he said.

Legal restrictions combined with schemes including a waste collection scheme dubbed You Pick it Up are especially effective in leading to a cleaner environment, he added.

In line with European Union restrictions, since last July manufacturers and retailers have been obliged to better inform buyers about the environmental impact of plastics and waste collection, he said. This has been enhanced by a registration system introduced in January which can monitor how these obligations are being kept, he added.

The government allocated 10 billion forints last year to help companies make technology upgrades, and an information portal has been set up at www.vali.hu to assist them in applying for funding, he said.

Parliament approved the main directives for reforming waste management last year, an important element of which is the recycling of plastic and glass containers for drinks and metal cans. In response to an online survey which showed that people would support the introduction of harsher penalties against illegal waste, the government has also started preparing a new system to address this issue, he added.

Steiner said that shaping public opinion is key to achieving change, and he welcomed the responsiveness of children to positive related messages.

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2021 had been the best year in Hungary-Russia cooperation, says foreign minister

lavrov szijjártó

The Hungarian government aims to further strengthen a recent “wave of dialogue between Western allies and Russia” to ease tension, the foreign ministry quoted Péter Szijjártó as saying in Moscow on Tuesday.

The foreign minister had talks with Russian counterpart Sergey Lavrov, after which he noted the recent emergence of “extremely serious tension” in central and eastern Europe, which he said was sharply against Hungary’s national security interests.

Dialogue is the only way to ease that tension “using all diplomatic means”, Szijjártó said.

“We have come to Moscow to support that dialogue,” he added.

Szijjártó called recent talks between the West and Russia “good news”, noting two conversations between Russian President Vladimir Putin and French President Emmanuel Macron over the past few days, and a planned call between Lavrov and US counterpart Antony Blinken later on Tuesday. He added that another call between Putin and British PM Boris Johnson was being negotiated, while a British ministerial delegation could soon visit Moscow.

Szijjártó said

2021 had been the “best year” in Hungary-Russia cooperation and the current talks “have made it clear that Russia is ready to continue, as it benefits both sides”.

At their talks, Szijjártó and Lavrov adopted an action plan concerning cooperation in food production, energy, space research and health, Szijjártó said.

“Last year the cooperation between Hungary and Russia greatly contributed to good responses to health and energy crises in the world, and that cooperation will continue to serve Hungary’s interests in future,”

he added.

As we wrote today, PM Orbán meets with President Putin in Moscow, read details HERE.

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Lawmakers passed an amendment to the law regulating supermarkets in Hungary

store shopping food tesco hungary

Lawmakers on Tuesday passed an amendment to the law regulating supermarkets which requires the retailers, from February next year, to offer food to the needy within 48 hours of its sell-by date.

The amendment passed with 138 votes in favour and 1 against.

The law applies to grocery chains whose annual net revenue exceeds 100 billion forints (EUR 272.5m).

Supermarkets will have the option of donating the food to a new state-owned nonprofit, the Food Rescue Centre, or directly to charity organisations.

They will also be required to draw up a plan to reduce their food waste and appoint a manager in charge of saving food.

Grocery chains that fail to submit their plan to the Food Rescue Centre or exceed their annual planned food waste by over 2 percent can be fined.

The law’s justification cites data from the United Nations’ Food and Agriculture Organization (FAO) indicating that around one-third of food produced for human consumption is wasted globally. According to a European Union study,

more than 5 percent of that food is wasted through retail and wholesale.

The amendment enters into effect on Feb. 1, 2022.

Economy’s ‘dimensional shift’ further accelerated despite pandemic, says FM Szijjártó

The Hungarian economy’s “dimensional shift” further accelerated in the past year and a half despite the coronavirus pandemic, with an increasing number of international research and development investment projects being implemented in Hungary, Foreign Minister Péter Szijjártó said on Tuesday.

Szijjártó attended an event where Linde Gáz Magyarország announced plans to set up a digital research and development hub in Budapest which aims to develop solutions to enable sustainable and profitable operations in processing plants, the ministry said. The 5 billion forint (EUR 14m) project will receive 970 million forints in state support and the German-owned company will initially offer 25 jobs to graduates, it added.

Szijjártó said that 2020 and to a certain extent even 2021 have been years that brought global economic activity to a halt.

The government’s task was to avoid this and enable Hungary to be among the winners of the new era of the global economy, he added.

One of the reasons for success was that the government agreed with large international companies on the expansion of their capacities, especially in research and development, he said. As a result, the “dimensional shift” of the economy has not slowed down but picked up pace, he added.

Research and development spending totalled 770 billion forints in Hungary last year, some 10 percent more than in 2019, Szijjártó said. More than three-quarters of this was represented by corporate spending, which shows that the private sector trusts the Hungarian investment environment, he added.

He cited assessments showing that

Hungary’s was the 34th most innovative economy in the world and said that the government wanted to make further progress in this area, also relying on international corporations to act as partners.

Linde Gáz Magyarország was set up in 1992 and the company currently has ten branches and nearly a hundred sales partners in Hungary. It is involved in the special storage and transport of Pfizer/BioNTech vaccines, playing a highlighted role in the fight against the coronavirus epidemic.

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Cornerstone laying of Belgrade-Budapest railway section held in Serbia

cornerstone laying of Belgrade-Budapest railway section

Péter Szijjártó, Hungary’s minister of foreign affairs, attended the cornerstone laying ceremony for the Novi Sad-Kelebia section of the Belgrade-Budapest railway in Novi Sad (Újvidék), in northern Serbia, on Monday.

Addressing the event, the minister said that those arguing against the construction of the high-speed railway and establishing a transport route between the Greek ports and western Europe want to deprive Hungary and Serbia of their competitive edge.

The opponents of the project want to play into the hands of other countries and act against Serbia and Hungary’s national interests, he said.

Szijjártó noted that 2020 had been the first year when China’s trade with both the European Union and the United States exceeded the EU-US turnover.

“More and more Chinese commodities arrive in the Greek ports and need to be transported to central and western Europe. There is a sharp competition for providing a transit route for them,”

he said.

“Serbia and Hungary have entered the race by deciding to construct a modern and safe railway line.”

By 2025 both the Hungarian and the Serbian sections of the over-300-kilometre line will have been completed, enabling the two countries to win the race, Szijjártó said.

The project is financed by China, Serbia and Hungary.

The cornerstone for the Budapest-Belgrade railway line upgrade was laid in  Hungary too, details.

Factory-China-investment
Read alsoHungary is a primary target for Chinese investments in Central Europe!

Consumer prices in Hungary: vehicle fuel prices jumped by 30.7 percent – UPDATE

traffic Budapest Hungary ferenciek

Consumer prices in Hungary rose by an annual 6.5 percent in October, up from 5.5 percent in the previous month, the Central Statistical Office (KSH) said on Tuesday.

Driven by higher cigarette, spirits and vehicle fuel prices, CPI is at the highest level in years and well outside of the 2-4 percent tolerance band of the National Bank of Hungary (NBH).

The October data show spirits and tobacco prices rose by 11.3 percent, lifted by a 17.6 percent increase in tobacco prices.

Prices in the category of goods that includes vehicle fuel climbed 13.0 percent as vehicle fuel prices jumped by 30.7 percent.

Food prices increased by 5.2 percent, household energy prices edged up 0.6 percent, consumer durable prices rose by 5.4 percent, clothing prices increased by 0.9 percent, and services rose by 3.7 percent.

Harmonised for better comparison with other European Union member states,

CPI stood at 6.6 percent.

Core inflation, which excludes volatile food and fuel prices, was 4.7 percent.

CPI calculated with a basket of goods and services used by pensioners stood at 5.7 percent.

In a monthly analysis released after the publication of the KSH data, the National Bank of Hungary (NBH) said the rise in inflation in October was “primarily fueled by an increase in fuel, industrial goods and food prices”. It noted that fuel prices contributed 1.9 percentage points to headline inflation.

The NBH’s measure of core inflation excluding indirect tax effects – a bellwether indicator of underlying inflation – rose to 4.7 percent in October from 4 percent in the previous month.

The central bank’s indicator for demand-sensitive inflation, which excludes processed foods from core inflation, increased to 4.7 percent from 4.1 percent.

The NBH said the indicators measuring households’ inflation expectations “showed unusually high volatility” but were “unchanged relative to the previous month”. It added that their value is above the central bank’s tolerance band.

At a monthly policy meeting in October, National Bank of Hungary (NBH) rate-setters ditched the baseline scenario in the central bank’s quarterly Inflation Report, published in September, agreeing that the inflation path had shifted to a risk scenario assuming a “persistently elevated external inflation environment”.

The policymakers said

inflation “would remain elevated over a longer period” and that achieving the inflation target “may be delayed” compared to the projection in the September Inflation Report, the minutes from the meeting showed.

Analysts told MTI that inflation surprised on the upside. Gergely Suppán of Takarékbank noted

inflation was largely fuelled by higher food and durable goods prices.

Péter Virovácz of ING Bank said the low base was not the sole explanation for the stand-out figure as CPI rose by 1.1 percent on a monthly basis. In addition to the rise in fuel prices, he said food, services and consumer durables all had a big part to play in the outsized inflation data.

Gábor Regős of Századvég Gazdaságkutató said the big rise in fuel prices pushed up inflation, but given the development of world oil prices, this was to be expected. But food and services caught expectations off guard, though higher energy prices due to Europe’s energy shortage may be reflected in the prices of various products, he added.

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Hungary-Poland business forum was held in Budapest

Central Europe could become one of the biggest winners of the new global economy thanks to stability, sensible economic policies and security policies focusing on national interests, Foreign Minister Péter Szijjártó said on Monday.

Szijjártó told a Hungary-Poland business forum that relations between the two countries could be best described as being fraternal, a statement by the ministry said.

“We must not tolerate being scorned and handled in Europe as pure beneficiaries of cooperation any longer,” he said. Hungarian and Polish people equally contribute with their work to the generation of community resources, he added.

Central Europe has greatly benefitted from pursuing “policies based on common sense” and the region has consequently become one of the most attractive targets for investment in recent years, Szijjártó said. He noted low taxes on labour, which he said the Hungarian government planned to further reduce, and efforts to guarantee people’s safety.

If the Visegrad Group’s four members were to form a state, it would be the second largest country and the third largest market in the European Union, Szijjártó said. He noted that

Germany’s trade with the V4 was twice as much as with France last year.

At the same time, the region still needs to overcome certain disadvantages in competitiveness. A high-speed rail network must be built and road transport further improved with the help of joint efforts, he added. The integration of the Western Balkans would greatly strengthen competitiveness even further, Szijjártó said.

In terms of Hungary-Poland economic ties, Szijjártó said Poland was Hungary’s fourth most important trading partner last year, with the value of trade exceeding 10 billion euros.

This accounted for some 5 percent of Hungary’s total foreign trade. In the first eight months of this year, bilateral trade increased by 22 percent to 8 billion euros and its value is expected to be record high for the whole of 2021, he said.

There are no open issues between the governments in Budapest and Warsaw, and there is consent in the most important European issues, Szijjártó said, noting the protection of national sovereignty and the concept of a strong EU based on strong nation states.

He also discussed the topic of energy crisis, stating that central European states shared the same view in terms of recognising nuclear energy as a sustainable energy source. Vertical transport routes for gas supplies will soon be completed for the region allowing Hungary access to LNG terminals in Poland, Szijjártó added.

Read alsoPM Orbán in talks with Salvini, Morawiecki on new EU political group

How much money will Hungary’s richest amass by 2022?

weather heat alert

The poorest people’s situation improved, the middle class did not particularly get wealthier, and the wealthiest amassed more wealth. People close to NER (National Cooperation System) certainly have advantages. But how much richer will Hungarians become in the next year?

“The amount of money stored on accounts under 100 million forints (EUR 286,428) increased by 130 per cent in 3 years until 2020, while the number of accounts decreased by almost 10 per cent. “ – István Karagich told Telex.

An analysis by Blochamps concluded that 8-9 per cent of private banking customers hold over 40 per cent of total domestic private banking assets, and Hungary may have up to 7,000 billionaires by 2025. Apart from today’s dollar billion pair (Sándor Csányi and Lőrinc Mészáros), there may be five new dollar billionaires in the future.

Covid took a toll on the rich as well, and the top 100 entrepreneurs’ total wealth dropped from 4633 billion forints (EUR 13,270,213,873) to 4568 billion. Although, 2021 may be a good year in terms of growth.

The number of the very rich is not growing, but their wealth is. Those who are already wealthy see a 10-20 per cent growth in their finances annually. Businesspeople related to politics have advantages, while others only keep their money and status.

István Karagich also told Telex that according to their prognosis, “the total assets managed by private banks will increase by almost 2,000 billion forints (EUR 5,728,562) to 8,000 billion (EUR 22,914,248) by 2022, and the financial portfolio of the richest entrepreneurs will expand to over 6,100 billion. (EUR 17,472,114,100)”

Another important aspect of this is that at the beginning of 2017, domestic private banks managed 3,860 billion forints (EUR 11,056,124,660) , but by the first half of 2021, this amount had increased to 7,000 billion (EUR 20,049,967,000), resulting in an 80 per cent increase.

 According to the Forbes list, in 2020, the richest Hungarian was Lőrinc Mészáros, businessman and publicly known friend of Prime Minister Viktor Orbán. His wealth is an outstanding sum of 479,4 billion forints (more than EUR 13,719,905,990).

Second on the list is Sándor Csányi, who owns 393.4 billion forints. Next in the line is Tibor Veres, with an estimated 258.6 billion (above EUR 7,389,844,980) net worth. On the list, we can also find László Szíjj, known as the owner of the most successful domestic road construction company, Duna Aszfalt Kft. According to Index, with his company, he earned 20 million forints (EUR 57,285) per day. István Garancsi got himself a place on the list as well. He acquired the late Andy Vajna’s most valuable company and now owns Budapest’s gambling market, among other business ventures. Vajna’s widow earned a spot on the Forbes list as well. Besides her, there is only one woman on the list, Mária Schmidt, in the 42nd place. Lajos Simicska is also on the list. One interesting fact about him is that he was a great friend of the Hungarian prime minister until a few years ago. Gábor Bojár is at the 49th place on the list, with a net worth of 28.6 billion forints (above EUR 80,199,868).

The 50th place on the list is a true mystery.

“Last year, a temporary court order forced the recall of Forbes magazine because a family complained that they were on the list of the richest Hungarians.” – writes Forbes. The incident was so unusual that even Associated Press, other American newspapers and European publications wrote about the case.

Hungary inflation eases to 4.6 pc in July – UPDATED

forint euro kató alpár fotó

Hungarian inflation was an annual 4.6 percent in July, after 5.3 percent in June, the Central Statistical Office (KSH) said on Tuesday.

CPI was driven by higher cigarette, spirits and vehicle fuel prices, with spirits and tobacco prices rising 11.1 percent, lifted by a 18.1 percent increase in tobacco prices. Prices in the category of goods that includes vehicle fuel grew by 8.6 percent, as vehicle fuel prices jumped 19.8 percent.

Food prices were up 3.1 percent, household energy prices edged 0.4 percent higher, consumer durable prices rose by 3.8 percent and clothing prices edged down 0.2 percent.

Core inflation, which excludes volatile food and fuel prices, was an annual 3.5 percent in July.

CPI calculated with a basket of goods and services used by pensioners stood at 4.2 percent.

In a month-on-month comparison, inflation was 0.5 percent.

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UPDATE

Analysts told MTI that whereas inflation had slowed somewhat in July, notable inflationary pressures remained.

Péter Virovácz of ING Bank said easing inflation had been largely due to base effects and there was still significant price growth on a monthly basis.

Gábor Regős of Századvég noted that inflation was still above the target band, and inflationary pressures remained, even if more moderately so.

Gergely Suppán of Takarékbank said

a cycle of interest rate hikes was needed, and the upside risks from second-round effects linked to commodity prices and re-invigorated demand, as well as wage pressure due to labour shortages, were substantial.

Dávid Németh of K and H Bank, said CPI growth was just shy of multi-year highs and it was far from clear that inflationary pressures in the economy had eased.

Hungary’s PPI at 11.6 pc in June

forint 20 thousands

Factory gate prices in Hungary rose by an annual 11.6 percent in June, picking up from the previous month to reach the highest level in years, the Central Statistical Office (KSH) said on Monday.

KSH said the increase was influenced by the forint’s exchange rate to the euro as well as dearer commodities and feedstock prices.

Prices for domestic sale increased by 15.4 percent, while export prices climbed by 9.7 percent.

In a month-on-month comparison, PPI rose by 1.0 percent as prices for domestic sale climbed 1.7 percent and export prices edged up by 0.7 percent.

For January-June, PPI was 9.5 percent as prices for domestic sales rose by 9.7 percent and prices for export climbed by 9.4 percent.

hungary factory
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The rise of Chinese merchants in Hungary

marketplace

The country has an impressive number of over 7000 Chinese and Vietnamese shops selling clothes and all sorts of products.

It is common knowledge that there is a relatively big Chinese community in Hungary, especially in the capital. So strong that in May, they organised a three-day-long campaign to vaccinate 600 Chinese people living in Hungary.

Chinese merchants used to start their businesses in the country with small shops and stores selling clothes. Today, they sell all kinds of products for very low prices, let it be a hand mixer, a suitcase, a football, clothing items or sweets. Not only Chinese, but more and more Vietnamese merchants are also present on the Hungarian market. Some of them even own their very huge stores, similar to shopping centres.

These Asian merchants started as simple vendors at marketplaces, selling their products on small tables. Then they moved into small shops, then to bigger ones, only

to establish their own marketplaces and department stores.

Their working circumstances and the image of their shops changed drastically, from a ramshackle hut to a fancy big building.

The new marketplace of Józsefváros district, Sárkánycenter (DragonCentre), and AsiaCenter, for instance, are all proofs of their development and expansion, writes the trade blog blokkk.com. The old marketplace of Józsefváros moved to the other side of the big Kőbányai út, where the owners established a neat and tidy place, similar to a nice shopping centre.

This change is also because most of these Chinese vendors selling clothes decided to switch to having a widespread business of considerable traffic. In Kőbánya (Buda), for example, a new wholesale centre was opened with brand new shops.

Especially in the past few years,

the number of those Chinese or Vietnamese stores and convenience shops selling all kinds of everyday items skyrocketed in the residential areas.

It might be the effect of fast fashion clothing lines that made prices decrease. Nevertheless, the previously very popular and small 1-euro shops also disappeared.

Today, it is easy to bump into an Asian convenience shop or small discount store anywhere in the capital. Napi.hu found out that

the number of Chinese or Vietnamese little shops or businesses in the country is somewhere between seven and eight thousand.

Even bigger villages and settlements possess at least one, let alone big cities.

Some of these businessmen managed to become quite a big fish in the dangerous waters of commerce by establishing small chains of shops. Having a webshop for their products is also part of the package. Unico-Trade, for one, has eight little shops – including a webshop – in Budapest, called Eugroup.

On the other hand, the coronavirus pandemic certainly hit hard these Chinese clothes shops and smaller businesses, together with the system of online cash registers. Since giving a receipt was never really fashionable at these businesses.

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Record cargo traffic in Budapest

BUD Cargo City

Air cargo continues to boom at Budapest Airport; the aerodrome handled 86 798 tons of air cargo during the first six months of 2021, which is the strongest half-year ever in its history. Thanks to the record half-year, cargo volume projected over 12 months also jumped to unprecedented heights; during the year from June to June, the Cargo City handled 157 402 tons of goods, whereby the airport has crossed the dream threshold of 150 000 tons. Amongst other factors, the airport’s excellent cargo infrastructure, the further strengthening of e-commerce and the fact that the Alibaba Group chose Budapest as its Central and Eastern European aerial logistics hub in April 2021 all contributed to the upturn in cargo traffic.

According to bud.hu, cargo traffic records are being broken on a monthly basis at Ferenc Liszt International Airport.

The cargo volume handled by the BUD Cargo City is continuously increasing, both compared to 2020 and 2019.

The airport handled 15 233 tons of air cargo in June 2021, which constitutes 52.6% growth from the same month of 2020 and 41.2% compared to the same period in 2019. Thanks to consecutive months of outstanding cargo figures, volumes reached an unprecedented level during the first half of this year as well; 86 798 tons of cargo passed through Budapest Airport from January to June 2021, which is 35.9% more than during the first six months of last year. The dynamic growth in cargo not only produced a record half-year, but also a record 12 months; during the period from June 2020 to July 2021, the airport crossed the dream threshold of 150 000 tons, taking another huge step towards becoming the air cargo hub for the region.

Chris Dinsdale, the CEO of Budapest Airport Zrt. emphasized in connection with the results:

“This is the first time in its history that Ferenc Liszt International Airport has crossed the threshold of 150 000 tons. Performance over the past 12 months confirms our belief that the cargo business is of key importance for us, and the Cargo City, handed over last year, is indeed able to energize and encourage freight forwarders to use Budapest Airport for air freight, which is a very attractive solution for the collection and distribution of air cargo.” He added: “At the same time, our many years of effort for cargo have paid off, and we are reaping the rewards of the conscious work that our colleagues and the cargo community have put in together. However, cargo is not only about the airport, it is also about the national economy as a whole, because, besides its ability to create jobs, stimulate investment and support local businesses, it provides a safe and stable transport option for all businesses, on which companies who choose air freight can build a calculable future.”

Budapest Airport’s air cargo activities create approximately 1800 jobs directly at the airport and an additional 10 000 via the related ecosystem. Amongst airports within the East-Central European region, the increase in Budapest Airport’s cargo traffic has consistently been in the top league for the last 2 years, and its strategic role is increasingly unquestionable, which is further strengthened by the outstanding cargo traffic over the past months between China and Hungary.

József Kossuth, head of cargo for Budapest Airport highlighted:

“We consider it one of our greatest successes this year that the Alibaba Group, one of the largest e-commerce businesses in China and its logistics partner, Cainiao, chose Budapest Airport as their regional hub.” He added: “We are delighted and proud that Alibaba has chosen us, which is a huge achievement with great growth potential and further business opportunities, not only for the airport but for the Hungarian logistics industry as well. The company’s presence in Budapest already means the arrival of approximately 2.5 million items per month currently by air, which will increase strongly over the coming months.”

Several factors have had a positive impact on the outstanding recent cargo volumes. Firstly, Budapest Airport’s new air cargo logistics base provides an important basis for growth; the first phase of the BUD Cargo City, handed over one-and-a-half years ago, ensures an efficient, optimal, world-class solution for the dynamically increasing air freight, with 32 000 square meters of new building space and new aircraft stands. Secondly, another definitive factor is the cargo-friendly environment at the airport, the work of the cargo community surrounding air freight, where the airport works with the airlines, ground handling companies, authorities and cargo partners to create a fast and precise handling and a high-quality logistics service environment. In addition to this, e-commerce is growing steadily and dynamically in the region, for which air freight can offer the fastest and most efficient solutions.

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Government pledges EUR 558.9m to boosting business productivity

hungary worker factory

The government will invite bids to disburse 200 billion forints (EUR 558.9m) in support of boosting the productivity of micro, small and medium-sized companies outside Budapest, the state secretary for European Union development policy at the human resources ministry said on Friday.

The grant scheme covered by the GINOP Plus economic and innovation programme will be the first one in which companies based in Pest County will be eligible to submit bids, Eszter Vitalyos told a press conference, noting that the county is now eligible to apply for European Union development funding independently of Budapest.

The first round of bidding will run from July 12 to 19, with further rounds planned in October and January, Vitalyos said.

The funds are expected to be disbursed among 1,500-3,000 companies, she said.

Trade volume continues double-digit expansion in May

Hungary’s trade volume continued to grow at a rapid pace in May, albeit from a low base, when pandemic shutdowns still impacted a number of sectors, data released by the Central Statistical Office (KSH) on Friday show.

Exports rose by an annual 37.9 percent to 9.397 billion euros, while imports climbed 38.2 percent to 9.300 billion euros.

The 97 million euro trade surplus edged up from 87 million euros in the base period.

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Hungary retail sales up 5.8 pc in May

Daily News Hungary economy

Retail sales in Hungary grew by an annual 5.8 percent in May, increasing for the second month in a row after eight months of declines, the Central Statistical Office (KSH) said on Tuesday.

Retail sales also rose by 5.8 percent when adjusted for calendar year effects. Adjusted food sales increased by 2.6 percent and non-food sales climbed 8.7 percent. Vehicle fuel sales increased by 9.7 percent.

Sales of clothing and footwear shops rose by 59.8 percent and second-hand shop sales climbed 48.4 percent, continuing to show strong growth after unprecedented increases in April, when non-essential businesses reopened after a pandemic lockdown.

In absolute terms, retail sales reached 1,146 billion forints (EUR 3.3bn), at current prices. Food sales accounted for 47 percent of the total, non-food sales for 38 percent and vehicle fuel sales by 15 percent.

Péter Cseresnyés, state secretary at the innovation and technology ministry, told public broadcaster M1 that further growth in retail trade was expected in view of increasing wages and the removal of coronavirus-related restrictions.

The May figure indicates that “retail has started to recover”, adding that 6 percent growth was similar to the tendency 7 years before the coronavirus outbreak.

During the epidemic, food shops stayed open, therefore spectacular growth was not on the cards, but the volume of online purchases has significantly grown, Cseresnyes said. Online companies have registered a combined turnover of 500 billion forints (EUR 1.4bn) since the start of the year, offering prospects of a further rise, he said.

Cseresnyés also noted that

over 4.5 million Hungarians held jobs with “continuously growing wages”, ensuring that their purchasing power had not diminished.

The high number of people inoculated against coronavirus ensures that all citizens can enjoy freer shopping now that the restrictions have been lifted, he added.

Analysts polled by MTI also said they expected further growth in retail in the coming months.

ING Bank leading analyst Péter Virovácz said

the May figure was “disappointing” considering the low base.

Though in April and May efforts were being made to revive the economy, a major boost to retail had failed to materialise, he said. Restarting the economy could give momentum to services, but these have no bearing on retail figures, he added.

Virovácz said, however, that his optimism for a rebound in June was “unbroken”, adding that a higher figure may have been supported by tourists recently visiting Budapest to watch football matches in the European championships.

Gergely Suppán of Takarékbank said

the May figure of 5.8 percent was below expectations, adding that families may have spent more of their money on recreation than shopping.

Retail turnover, however, will be supported by people gradually returning to their jobs, as well as by a “dynamic wage growth in sectors unaffected by the restrictions”. According to Suppan, retail turnover could grow by 3 percent this year, but this year’s low base, and refunding personal income tax to parents next year could result in double-digit growth. He said pre-pandemic levels in retail could be reached in the second half of this year.

Századvég analyst Gábor Regős said

the May figure had come as expected in view of the removal of restrictions and the low base.

Retail could be boosted by easing further restrictions and growing employment, he said, warning however that a possible fourth wave of the pandemic could impact that tendency.

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Finance minister: Hungary ranks 42nd in IMD competitiveness report

VARGA Mihály

Hungary has jumped five places to rank 42nd in the report published by the Swiss IMD World Competitiveness Center, Finance Minister Mihaly Varga said on Thursday.

Hungary showed the third largest improvement according to the center’s 2021 yearbook which listed 63 countries, Varga told an online press conference.

Varga said government measures aimed to balance the fallout of the epidemic as well as to help the economy “come out on top” after the crisis, were at the root of the progress.

The Hungarian government handled the crisis by tax cuts, investment support and job protection through steps such as a loan moratorium and wage support, Varga said.

The IMD results show the effectiveness of those measures, as Hungary’s improvement was largest in the competitiveness of the tax system, in the job market and international investments, he said.

Hungary has jumped to 8th place in economic performance, its best ranking since the IMD report was launched 25 years ago, Varga said. Within that factor, Hungary’s performance in the employment and taxation subsections was the best ever recorded, he added.

In international investments, Hungary has improved 30 places, Varga said, thanks to the government policy prioritising investment support, Varga said. Some 4,000 billlion forints of last year’s budget went towards that goal, he said. The National Investment Agency has supported 907 projects in 2020, resulting in investments worth 4,078 billion euros, he added.

Hungary will continue the work as “the 42nd place is far from what the country deserves”, Varga said.

IMD put “looming inflation”, “pressures on public finance due to COVID-19 and the election year of 2022” and “COVID-19 related socio-economic disruptions” among the challenges Hungary faces in 2021.

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Hungary’s investment growth at 2.5 pc in Q1

Daily News Hungary economy

Investment volume in Hungary rose by an annual 2.5 percent in the first quarter of 2021, level with the rate of growth in the previous quarter, the Central Statistics Office (KSH) said on Monday.

Investments in machinery climbed by 7.0 percent, but construction investments edged down by 1.0 percent.

In absolute terms, Q1 investments reached 1,979 billion forints (EUR 566.1bn). Construction investments accounted for about 53 percent of the total.

Private sector investments dropped 6.3 percent to 1,055 billion forints, while public sector investments climbed by 30.6 percent to 260 billion.

Manufacturing sector investments fell by 10.1 percent, construction sector investments jumped by 48.2 percent and investments in the commercial accommodations and catering sector increased by 12.8 percent.

Investment volume started rising again in Q4, after three consecutive quarters of declines.

The decline in trade in services slowed somewhat in the first quarter but remained in the double digits, KSH said. Exports of services fell by an annual 24.6 percent to 4.277 billion euros, while imports dropped by 16.3 percent to 3.451 billion.

The surplus in trade of services came to 826 million euros.

KSH noted that the coronavirus pandemic continued to significantly reduce foreign trade in services.

Contract work contributed around 319 million euros to Hungary’s surplus, while 317 million euros came in from tourism and 282 million from transport services.

Germany continues to be the most important foreign partner of Hungary with exchanges between the two accounting for 20 percent of total trade. The United States was in second place with 9.4 percent of total trade and Austria was third with 7.8 percent of the total.

Business services accounted for 53 percent of service exports and 69 percent of service imports. The share of transport services was 25 percent and 23 percent, respectively.

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