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Hungary Economy 1996

Overview:

Since 1989 Hungary has been a leader in the transition from a socialist command economy to a market economy - thanks in large part to its initial economic reforms during the Communist era. The private sector now accounts for about 55% of GDP. Nonetheless, the transformation is proving difficult, and many citizens say life was better under the old system. On the bright side, the four-year decline in output finally ended in 1994, as real GDP increased an estimated 3%. This growth helped reduce unemployment to just over 10% by yearend, down from a peak of 13%. However, no progress was made against inflation, which remained stuck at about 20%, and the already-large current account deficit in the balance of payments actually got worse, reaching almost $4 billion. Underlying Hungary's other economic problems is the large budget deficit, which probably exceeded 7% of GDP in 1994, despite some late-year budget cutting by the new leftist government. In 1995 the government has pledged to accelerate privatization and lower the budget deficit to 5.5% of GDP. It believes this fiscal tightening will reduce the current account deficit to $2.5 billion but at the cost of holding economic growth to only 1%.

National product:

GDP - purchasing power parity - $58.8 billion (1994 est.)

National product real growth rate:

3% (1994 est.)

National product per capita:

$5,700 (1994 est.)

Inflation rate (consumer prices):

21% (1994)

Unemployment rate:

10.4% (yearend 1994)

Budget:

revenues:

$11.3 billion

expenditures:

$14.2 billion, including capital expenditures of $NA (1994)

Exports:

$10.3 billion (f.o.b., 1994 est.)

commodities:

raw materials and semi-finished goods 30.0%, machinery and transport equipment 20.1%, consumer goods 25.2%, food and agriculture 21.4%, fuels and energy 3.4% (1993)

partners:

Germany 25.3%, Italy 8.3%, Austria 10.5%, the FSU 14.0%, US 4.3% (1993)

Imports:

$14.2 billion (f.o.b., 1994 est.)

commodities:

fuels and energy 12.6%, raw materials and semi-finished goods 27.3%, machinery and transport equipment 33.0%, consumer goods 21.2%, food and agriculture 5.9% (1993)

partners:

Germany 21.5%, Italy 6.1%, Austria 11.8%, the FSU 20.9%, US 4.3% (1993); note - about one-fourth of the imports from the FSU were MiGs delivered as a debt payment

External debt:

$27 billion (September 1994)

Industrial production:

growth rate 7% (1994 est.)

Electricity:

capacity:

6,740,000 kW

production:

31 billion kWh

consumption per capita:

3,012 kWh (1993)

Industries:

mining, metallurgy, construction materials, processed foods, textiles, chemicals (especially pharmaceuticals), buses, automobiles

Agriculture:

including forestry, accounts for 15% of GDP and 16% of employment; highly diversified crop and livestock farming; principal crops - wheat, corn, sunflowers, potatoes, sugar beets; livestock - hogs, cattle, poultry, dairy products; self-sufficient in food output

Illicit drugs:

transshipment point for Southeast Asia heroin and South American cocaine destined for Western Europe; limited producer of precursor chemicals

Economic aid:

recipient:

assistance pledged by OECD countries since 1989 about $9 billion

Currency:

1 forint (Ft) = 100 filler

Exchange rates:

forints per US$1 - 112 (January 1995), 105.16 (1994), 91.93 (1993), 78.99 (1992), 74.74 (1991), 63.21 (1990), 59.07 (1989)

Fiscal year:

calendar year

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