Hungary: Opportunities for Investors
In general, investments are expected to grow by around 5% in 2008. Public services will probably live a period of stagnation. The building industry and the trading sector will moderately grow. The agricultural sector can produce dynamic expansion even with average weather conditions. The comparative advantages of the Hungarian economy are the freedom of trading and investments, the widespread presence of foreign ownership, the relatively well-educated population, and the traditionally good scientific education and researches. Disadvantageous factors are the high level and unfavorable structure of taxes and contributions (that puts serious charges on the living labor force and causes a high redistribution of incomes).
The measures of the government are also not always predictable, because the parliament is dominated by two almost equally strong opposite parties. Currently the Hungarian Socialist Party (MSZP) governs together with the Hungarian Liberal Party (SZDSZ). They have stable majority in the parliament, but they lost much of their popularity and credibility because of unpopular restrictive measures and a scandal around the person of the prime minister. So the opposite side (mainly the FIDESZ – a rightist, conservative party that is the bigger force in opposition) has very good chance to win the next elections in 2010. Nevertheless, the great social care and health systems are out of question in need of structural reform. The accent is on »how«.
The inflow of working capital is traditionally high since 1990. In the last years it was about 3-4 billion euros yearly. The profitability rate of the companies is constantly above 10% since the mid-years of 2000. The productivity of the living labor force (GDP/employees) is outstandingly high in Hungary.
