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HUNGARY
Year of EU entry 2004
Political system Republic
Capital city Budapest
Total area 93,000 km2
Population 10.1 million
Currency Forint |
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Overview
Hungary is a landlocked state with many neighbours - Slovakia, Ukraine, Romania, Serbia, Croatia, Slovenia and Austria. It is mostly flat, with low mountains in the north. Lake Balaton, a popular tourist centre, is the largest lake in central Europe.
The ancestors of ethnic Hungarians were the Magyar tribes, who moved into the Carpathian Basin in 896, conquering the people already in the region. Hungary became a Christian kingdom under St Stephen in the year 1000. The Hungarian language is unlike the other neighbouring languages and is only distantly related to Finnish and Estonian.
The capital city, Budapest, which originally was two separate cities: Buda and Pest, straddles the River Danube. It is rich in history and culture and famed for its curative springs. Hungary has a single-chamber parliament or national assembly whose 386 members are elected by voters every four years.
Hungary has some limited natural resources (bauxite, coal, and natural gas), as well as fertile soils and arable land. Hungarian wines are drunk throughout Europe. The country's main manufactured exports include machinery and transport equipment, foodstuffs and chemicals.
Hungary is a highly musical country whose traditional folk music inspired its great composers such as Liszt, Bartók and Kodály.
Economy
Hungary has made the transition from a centrally planned to a market economy, with a per capita income one-half that of the Big Four European nations. Hungary continues to demonstrate strong economic growth and acceded to the EU in May 2004. The private sector accounts for over 80% of GDP. Foreign ownership of and investment in Hungarian firms are widespread, with cumulative foreign direct investment totaling more than €45.8bn since 1989. Hungarian sovereign debt was upgraded in 2000 and together with the Czech Republic holds the highest rating among the Central European transition economies; however, ratings agencies have expressed concerns over Hungary's unsustainable budget and current account deficits. Inflation has declined from 14% in 1998 to 3.7% in 2005. Unemployment has persisted around the 6% level, but Hungary's labour force participation rate of 57% is one of the lowest in the Organisation for Economic Cooperation and Development (OECD). Germany is by far Hungary's largest economic partner. Policy challenges include cutting the public sector deficit to 3% of GDP by 2008, from about 6.5% in 2005, and orchestrating an orderly interest rate reduction without sparking capital outflows.
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