Flag of Hungary

Hungary country brief

Introduction/overview

Hungary is a landlocked country in Central Europe bordered by Slovakia to the north, Austria and Slovenia to the west, Croatia and Serbia to the south, and Romania and Ukraine to the east and north-east. The population of Hungary is just under 10 million (2012). The capital is Budapest.

Hungarians celebrate their national or State day on 20 August each year, known as the Day of the Foundation of the State of Hungary and St Stephen's Day (after Hungary's first king). Hungary also celebrates national days on 23 October (commemorating the outbreak of the 1956 Uprising and the proclamation of the Hungarian Republic in 1989) and 15 March (commemorating the 1848-49 Revolution and War of Independence).

Political overview

System of Government

Hungary has a democratically-elected, unicameral parliament, the National Assembly. The 199 members of parliament are elected under a combined system of party lists and single member electoral constituencies.

Political developments

Parliamentary elections were last held on 6 April 2014, the seventh elections since the end of the communist era in Hungary. The Fidesz- Christian Democratic People's Party (KDNP) coalition won 133 seats, maintaining its two-thirds majority. Major legislative changes undertaken by the Fidesz-KDNP Government since 2010 have included a new Constitution, media, banking and religious laws. However, aspects of these laws have been subject to criticism, both within Hungary and from the EU.

Hungary's current Prime Minister is Viktor Orbán. Mr Orbán is a founding member of the Fidesz Party and was also Prime Minister from 1998-2002. The current President, Dr János Áder, took up office on 2 May 2012, following the resignation in April of Dr Pál Schmitt. The President, elected by the Parliament every five years, has a largely non-political role. The President does, however, have the right to send proposed legislation back to Parliament for reconsideration, or to the Constitutional Court for a review of its constitutionality.

Foreign policy

Hungary is a member of the World Trade Organization (one of the founding members), the International Monetary Fund (1982), the Organization for Economic Cooperation and Development (OECD) (1996), NATO (1999) and the European Union (2004). Hungary is also a member of the EU's visa-free zone, the Schengen Area, which it joined in December 2007.

Hungary is a member of the Visegrad Four, with Poland, the Czech Republic and the Slovak Republic. This is an unofficial grouping of the four Central European countries which aims to promote closer cooperation between the four countries, all relatively new members of the European Union.

Economic overview

Hungary is one of the more developed market economies amongst the new EU member states in Central and Eastern Europe, with the private sector accounting for more than 80 per cent of GDP. The economy has been extensively liberalised through privatisation, foreign investment and the introduction of comprehensive commercial laws. Key reasons why foreign investors choose Hungary are the quality of its workforce, its excellent infrastructure, its central geographic location and relatively low costs. In recent years, Hungary's heavy taxation regime and the absence of essential administrative reforms have significantly impacted on its business environment, although it still remains a major recipient of foreign direct investment.

The Hungarian economy is closely tied to the fortunes of the leading eurozone economies, especially Germany. About three quarters of Hungary's exports go to EU countries, primarily Germany, Austria, France and Italy. Russia is also an important trading partner, supplying most of Hungary's natural gas needs and other energy and mineral resources.

Hungary has been experiencing difficult economic conditions. An unsustainable budget deficit forced the introduction of severe government spending restrictions in 2006 and this led to a drop in economic growth and consumer and business confidence. The onset of the global economic crisis compounded Hungary's economic problems and Hungary went into recession in 2008. After a period of economic respite in 2010 and 2011, Hungary's economy returned to recession in 2012 (decline of 1.7 per cent GDP). It recovered in 2013, and grew by 1.1 per cent. The European Commission forecasts 2.1 per cent growth for 2014. Unemployment is projected to fall below 10 per cent in 2014 .

Bilateral relationship

Hungary and Australia enjoy friendly, co-operative relations with strong people to people links flowing from the large numbers of Hungarians who migrated to Australia in the twentieth century, especially following the 1956 Uprising against the Soviet occupation of Hungary. At the time of the 2011 Census, there were 69,160 people in Australia of Hungarian ancestry.

Australia established full diplomatic relations with Hungary in 1972. Hungary has an Embassy in Canberra and Consulates in Queensland, South Australia, Victoria and Western Australia. The Australian Embassy in Budapest closed permanently in July 2013. The Australian Ambassador to Hungary is accredited from Vienna. 

Bilateral agreements between Australia and Hungary include treaties on Mutual Assistance in Criminal Matters and Extradition (1997) and an agreement on Cooperation in the Peaceful Uses of Nuclear Energy and the Transfer of Nuclear Material (2002). A bilateral Social Security Agreement was signed in June 2011. Australia's economic relations with Hungary are facilitated by a bilateral Double Taxation Agreement and an Investment Promotion and Protection Agreement.

High-level visits

High-level visits between Australia and Hungary have served to develop bilateral relations. In March 2012, a Parliamentary Delegation led by the Speaker of the House of Representatives visited Budapest. Former Ministers for Foreign Affairs, Kevin Rudd and Stephen Smith, visited Hungary in June 2011 and July 2009 respectively. Australia's former Minister for Veterans' Affairs, the Hon Bruce Billson MP, represented Australia at the official commemorations of the fiftieth anniversary of the 1956 Uprising in October 2006.

Hungary's Deputy Prime Minister of Hungary, Dr Zsolt Semjén, visited Australia in October 2013 to open an upgraded Hungarian Consulate in Melbourne. Dr Semjén also visited in 2011. Hungary's Minister of State for Foreign Affairs, Mr Zsolt Németh, visited Australia with a business delegation in April 2013.. The then-President of Hungary, Dr László Sólyom, visited Australia in September-October 2009. The First Deputy Speaker of the Hungarian Parliament, Mr László Mandur, visited Australia in November 2009.

Bilateral economic and trade relationship

Hungary's position in Europe as a landlocked country and its relative lack of natural resources has necessitated a traditional reliance on foreign trade.

The total volume of merchandise trade remains modest and overwhelmingly in Hungary's favour. Total two-way merchandise trade in 2012-3 was valued at A$312 million, with Australian imports totalling A$296, and comprising mainly electrical circuit equipment (A$42 million) and computers (A$29 million). The main Australian exports to Hungary in 2012-3 included medicaments (A$4 million) and vehicle parts and accessories (A$4 million), and rubber articles (A$1 million).

At 31 December 2012, Australian investment stock in Hungary was estimated at A$276 million, a 37 per cent increase on 2011 figures. Hungarian investment in Australia was estimated at A$13 million. Several Australian companies are active in the energy sector in Hungary, including uranium prospecting, clean energy technologies and renewable energy production.

For information on doing business in Hungary, please see Austrade's website.

Updated May 2014