Flag description:
three equal horizontal bands of red (top), white, and green
Economy
Hungary
Economy - overview:
Hungary has made the transition from a centrally planned to a market economy, with a per capita income nearly two-thirds that of the EU-25 average. The private sector accounts for more than 80% of GDP. Foreign ownership of and investment in Hungarian firms are widespread, with cumulative foreign direct investment totaling more than $60 billion since 1989. Hungary issues investment-grade sovereign debt. International observers, however, have expressed concerns over Hungary's fiscal and current account deficits. In 2007, Hungary eliminated a trade deficit that had persisted for several years. Inflation declined from 14% in 1998 to a low of 3.7% in 2006, but jumped to 7.8% in 2007. Unemployment has persisted above 6%. Hungary's labor force participation rate of 57% is one of the lowest in the Organization for Economic Cooperation and Development (OECD). Germany is by far Hungary's largest economic partner. Policy challenges include cutting the public sector deficit to 4% of GDP by 2008, from about 6% in 2007. The government's austerity program of tax hikes and subsidy cuts has reduced Hungary's large budget deficit, but the reforms have dampened domestic consumption, slowing GDP growth to about 2% in 2007. The government will need to pass additional reforms to ensure the long-term stability of public finances. The government plans to eventually lower its public sector deficit to below 3% of GDP to adopt the euro.
GDP (purchasing power parity):
$191.7 billion (2007 est.)
GDP (official exchange rate):
$138.4 billion (2007 est.)
GDP - real growth rate: