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Hungary: facts and figures Key factors of competitiveness.

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Presentation on theme: "Hungary: facts and figures Key factors of competitiveness."— Presentation transcript:

1 Hungary: facts and figures Key factors of competitiveness

2 Hungary Land: 93,030 km² Population: ~10 million GDP/capita, at PPP (2012): EUR 16,700/ USD 21,456 Source: Eurostat, IMF Location: a market of 507 million EU citizens with access to the market of 205 million people of Russia, Ukraine and the Western Balkan countries

3 Overview EU GDP Export of goods and services Employment and wages Inflation •EU-member since 2004 •GDP growth (2013Q3): 1,7% •Forecast (2013): 0.9%; (2014): 2% •Export volume growth (2012): 1.7% •Forecast (2013): 4.5%; (2014): 5.8% •Average gross wage (2012)*: €770.5; $989.8 •Unemployment rate (June-Sept 2013): 9.8% •Inflation rate (Sept 2013): 1.4% •Forecast (2013): 1.9% •Government balance (2012): -1.9% •Forecast (2013) : -2.7% (% of GDP) *Exchange rate: 1 €= HUF, 1 $=225,37 Source: HCSO, Draft Budget 2014 Budget balance

4 Economy and Economic Policy

5 Source: Eurostat Nominal GDP in Hungary million EUR

6 1055 BUDAPEST, HONVÉD UTCA 20. TELEFON: (+36) FAX: (+36) Source: Eurostat Nominal GDP in Hungary million USD

7 Source: Hungarian Central Statistical Office Gross Value Added by sectors in Hungary (2012)

8 Source: Hungarian Central Statistical Office Year Import (Million €) Export (Million €) Total Trade (Million €) Trade Balance (Million €) , , , , , , , , , , , , , , , , , , , International trade of Hungary

9 Source: Hungarian Central Statistical Office Year Import (Million $) Export (Million $) Total Trade (Million $) Trade Balance (Million $) , , , , , , , , , , , , , , , , , , , International trade of Hungary

10 Source: Hungarian Central Statistical Office Geographical distribution of Hungarian trade (2012) IMPORT EXPORT

11 Source: Hungarian Central Statistical Office Main trade partners of Hungary (2012) Main Import Partners (2012, Million EUR) Germany Russia Austria China Slovakia Poland Italy Netherlands France Czech Republic Main Export Partners (2012, Million EUR) Germany Romania Slovakia Austria Italy France United Kingdom Czech Republic Poland Russia 2 553

12 Growing surplus in balance of trade Source: : Hungarian Central Statistical Office Million euro

13 Balance of trade Source: IMD, World Competitiveness Online 2012 Percentage of GDP (2011)

14 Improving balance of current account Source: HCSO Percentage of GDP

15 Trade to GDP ratio (%) Source: IMD World Competitiveness Online 2012 Internationalized, open economy

16 Percentage of GDP (2012) Source: Eurostat Government budget balance

17 Percentage of GDP ( ) Source: IMD World Competitiveness Online 2012 Export of goods

18 Source: IMD World Competitiveness Online 2012 Percentage of GDP ( ) Export of commercial services

19 Medium term economic outlook Source: Draft Budget 2014 Forecast of main economic indicators GDP growth (%) Inflation (%) Current account balance (% of GDP) Export growth (%) Budget balance (% of GDP) Government debt (% of GDP)

20 Short overview of aims and achievements Hungarian Economic Policy 2013

21 Most important aims of the Hungarian economic policy •Securing financial and fiscal stability: introducing strict fiscal policy •Public debt target: 50%. •Budget deficit target: < 3%. •Inflation target of the Central Bank of Hungary: 3% •Turning welfare state into an economy based on productive labour, by increasing the level of employment •Improving business environment •Promoting foreign and domestic private investments

22 •Financial consolidation •Since 2011 Q3, the external debt has decreased by some 18.7% of GDP. •The budget deficit has been succesfully kept below 3% of GDP from 2012 •2013: excessive deficit procedure (EDP) has been abrogated by the EU •Inflation rate is record low: 0,9% in October 2013, and the yearly rate is expected to be 1.9% for 2013 and 2.4% for 2014 •Labour market tendencies •Employment reached a historic peak, it has been rising steadily since 2010 S2 •In the period June-August 2013, employment raised by 1.7% Achievements

23 •Tax system –Gradual move from income taxes based system to a consumption taxes based one –16% flat-rate personal income tax –A corporate tax rate of 10% applies to tax base up to HUF 500 million •Business environment –More than 30 strategic cooperation agreements between the Government and companies •Structural reforms –Ongoing and concluded reforms of the pension system, public transport, higher education, state and municipal financing etc. Achievements

24 The New Labor Code •Main purpose: to create a labor law system which is in line with new market conditions •More flexibility: parties have more freedom to negotiate •Employment, established for a definite period can also be terminated by (ordinary) notice •Extra work (overtime): 250 hours / year, in collective agreement: 300 hours / year •Atipical forms of employment

25 Job protection action plan •The government has launched a new action plan to improve the situation of •disadvantaged employees (elderly, young and unskilled people) •jobseekers •enterprises •Main measure: •cutting employer’s contributions

26 Type of employees The contributions payable by the employer has been reduced: The new rate is: below the age of 25 years from 28.5% by 14.5%.  14%. above the age of 55 years unskilled entrants below the age of 25 years•in the initial two years by 100 %, •from the third year by 14.5% (nearly halves)  0% in the initial two years,  14% from the third year long-term unemployed mothers with small children Job protection action plan Contribution allowances up to a certain level of wage

27 FDI in Hungary

28 Million EUR New methodology from 2008 Source: National Bank of Hungary, 2013 Repurchase of MOL shares ; Devaluation of HUF Stock of Foreign Direct Investments in Hungary

29 EUR (2012) Source: wiiw, 2013 Second highest FDI stock/capita in CEE

30 Percentage of GDP (2012) Source: Eurostat, Hungarian National Bank, OECD Inward FDI stock

31 Stock of FDI in Hungary by origin (2012) Source: Hungarian National Bank, 2013

32 Stock of FDI in Hungary by country of origin (2012) Source: Hungarian National Bank, 2013

33 Stock of FDI in Hungary by sector (2012) Source: Hungarian National Bank, 2013

34 RankRegion/Economy 1HUNGARY 2Belgium 3Czech Republic 4Romania 5Hong Kong, China 6Poland 7Malaysia 8Estonia 9Bolivia 10Colombia 11Switzerland 12Sweden 13Singapore 14Finland 15United Kingdom Hungarian economy has the largest contribution by FDI therefore achieved the first position. UNCTAD FDI Contribution Index, 2012

35 Main investment decisions in 2013 •Coloplast, medical devices manufacturing •OPEL, engine manufacturing •ZF Lenksysteme, electric steering systems •Infineon: semiconductor components producing •Hankook, tyre manufacturing •Hewlett-Packard, IT •Sauflon, contact lens manufacturing •Samsung: electronics manufacturing •Procter & Gamble, personal care products manufacturing •General Electric, establishment of an oil & gas branch •Greif, shared service center •Bridgestone, tyre manufacturing •Jabil, electronics manufacturing •Thai President Foods, instant noodle manufacturing •Systemax, shared service center •Bosch, R&D facility •Flextronics: electronics manufacturing •DHL: Express logistics

36 Benefit from a good balance of quality and cost of labour Take advantage of high-quality infrastructure and a stable business environment Competitiveness in general

37 Competitive tax system •Low corporate income tax: •rate for the first HUF 500 million (EUR 1.69 million, USD 2.22 million) of the tax base is 10%; •beyond HUF 500 million, it is 19%. •Tax incentives and allowances (development tax allowance, R+D tax incentives) •Flat personal income tax: 16% 37 Source: KPMG, 2013 November *: effective tax rate CEE countriesCorporate income tax Slovakia23% Czech Republic19% Poland19% Slovenia17% Romania16% Hungary10-19%

38 Competitive Labour Costs Source: Eurostat

39 Competitive Labour Costs Source: Eurostat

40 Total hourly labour costs in the services of the business economy, 2012, (€) Source: Eurostat

41 Total hourly labour costs in the services of the business economy, 2012, ($) Source: Eurostat

42 Competitive average wages Source: wiiw, Eurostat, national statistics

43 Competitive average wages Source: wiiw, Eurostat, national statistics

44 High average yearly working hours (2011) Source: IMD, World Competitiveness Online 2012

45 Labour Productivity GDP(PPP) per person employed per hour Source: IMD World Competitiveness 2012

46 Gross wage levels in European cities Source: UBS, Wealth Management Research, Prices and Earnings, 2012 September New York=100 (2012)

47 Labor regulations favor business activities Source: IMD, World Competitiveness Online 2012

48 Unemployment legislation provides an incentive to look work for Source: IMD, World Competitiveness Online 2012

49 Higher education Number of institutions in higher education68 Number of locations183 Number of students in higher education360,000 Majoring in:  Business and Administration81,923  Technical edu.63,388  Informatics10,724  Foreign languages9,113 Number of tertiary level graduates 55,154 •92.4 % of fresh graduates has English language skills •2nd most popular foreign language: German (70%) •Followed by: Russian, French, Italian, Spanish •All degrees include foreign- language certificate and computer skills Academic year 2011/2012 Well trained, creative and flexible human capital

50 High Proficiency English Language Skills The EF English Proficiency Index 2012 Source: EF EPI English Proficiency Index 2012

51 Quality of math and science education in V4 countries (2013) Source: World Economic Forum: Global Competitiveness Report

52 1055 BUDAPEST, HONVÉD UTCA 20. TELEFON: (+36) FAX: (+36) University education meets the needs of a competitive economy Source: IMD, World Competitiveness Online 2012

53 Intellectual property protection in V4 countries (2013) Source: World Economic Forum: Global Competitiveness Report

54 Strong scientific capacity The quality of scientific research institutions The World Economic Forum ranks Hungary No. 21 within 148 countries CountryRanking Israel1 Switzerland2 United Kingdom3 Germany6 Japan9 Ireland14 Hungary21 Austria23 Spain36 Italy40 China41 Poland55 Romania64 Slovak Republik70 Source: WEF Global Competitiveness Report,

55 Utility patents granted/million population (2013) Source: World Economic Forum: Global Competitiveness Report

56 Quality of research institutions in V4 countries (2013) Source: World Economic Forum: Global Competitiveness Report

57 Availability of scientists and engineers in V4 countries (2013) Source: World Economic Forum: Global Competitiveness Report

58 Competitiveness in general

59 Excellent access to key markets At the cross roads of 4 main European transportation corridors Extensive road and railway transportation network Highly developed logistics and telecommunications infrastructure

60 Expanding motorway network Vienna, 1 hr Rotterdam, 12 hrs Prague, 5 hrs Munich, 6 hrs Hamburg, 8hrs Warsaw, 10 hrs Kyiv 12 hrs Zagreb, 1 hr Trieste, 6 hrs Koper, 6 hrs Bucharest, 10 hrs Constanza, 12 hrs

61 Road density km/km 2 Source: IMD, World Competitiveness Yearbook, 2012

62 Quality of roads in V4 countries (2011) Source: The Global Competitiveness Report

63 Density of the railroad network km/km 2 Source: IMD, World Competitiveness Online 2012

64 Railway network in Hungary V0 Railway (future development) International airport

65 Number of days to start a business (2012) Source: The Global Competitiveness Report

66 Key reasons to invest in the Hungarian Shared Service Sector •Ca. 80 exisiting SSCs operating in Hungary •Investment friendly political measures (financial support, tax allowances) •Competitive taxation system •Good balance of costs and quality •High level of educational system •Close cooperation between educational institutions and companies •Excellent office infrastructure •Quality of life •21 International schools •Favourable location: NY -6 hrs, Tokyo +7 hrs

67 „A” class offices Stock in Budapest (2013 H1): 3,164,000 m 2 Average rental price (headline rents) : Budapest  EUR 10-13/m 2 /month (non-central submarkets)  EUR 12-15/m 2 /month (central submarkets)  EUR 7-10/m 2 /month (periphery) Vacancy rate in Budapest in 2013 H1: 19.9% Business infrastructure in Hungary: - Top-quality telecommunications services - Easy access to 3T, xDSL connections Corvin Offices Millennium Tower Eiffel Square Lively Office market Source: CBRE 2013 H1

68 Ready-made industrial sites • Green- and brownfield investments • Good access to highways • Excellent infrastructure services • Turnkey solutions • New technology and logistical parks • Warehousing • Customs arrangements • Forwarding • Administration (authority permits) • Financial services • Legal consulting • Extra services More than 210 industrial parks are available for manufacturing activity Nyíregyháza, IP Tatabánya, IP

69 Average indicative prices by regions 2012 Southern Great Plain Northern Great Plain Northern Hungary Central Transdanubia Source: Hungarian Investment and Trade Agency The land prices depend on the condition of the sites (eg. utility capacities, location) Developed Industrial Sites Average land prices in the industrial parks by regions (EUR/m 2 + VAT) Average land prices in industrial or other development sites (out of parks) (EUR/m 2 +VAT) Central Hungary Western Transdanubia Southern Transdanubia

70 Average indicative prices and rental fees by regions 2012 Southern Great Plain Northern Great Plain Northern Hungary Central Transdanubia Source: Hungarian Investment and Trade Agency The hall prices and rental fees depend on the condition of the sites (eg. utility capacities, location) Manufacturing halls Average prices of manufacturing halls by regions (EUR/m 2 + VAT) Average rental fees of manufacturing halls by regions (EUR/m 2 /month +VAT) Central Hungary Western Transdanubia Southern Transdanubia

71 Industrial rents in industrial zone Source: Economist Intelligence Unit Database 2012 Average price per square meter/year, USD (2011)

72 Expats like Hungary •International schools in Budapest British, American, German, Austrian, French, Chinese, Japanese etc. •High standard private medical services •Entertainment facilities Thermal baths, wellness, recreation centres throughout the country Rich cultural life Excellent food and wine •According to Condé Nast Traveler readers Budapest is the second best city on earth

73 Budapest is the second best city in the World According to Condé Nast Traveler readers Budapest is the second best city on earth 1. San Miguel de Allende, Mexico 2. Budapest, Hungary, Florence, Italy 4. Salzburg, Austria 5.Charleston, South Carolina, United States, San Sebastián, Spain 7. Vienna, Austria 8. Rome, Italy 9. Siena, Italy 10. Québec City, Canada, Cape Town, South Africa, Bruges, Belgium 13. Vancouver, Canada 14. Kyoto, Japan 15.Prague, Czech Republic; Kraków, Poland 17.Victoria, Canada; Sydney, Australia; Santa Fe, New Mexico, United States 20.Seville, Spain; Beirut, Lebanon 22.Paris, France; Melbourne, Australia 24.Venice, Italy; Barcelona, Spain Source: Top 25 Cities in the World, Readers' Choice Awards 2013

74 Quality of life in Hungary Hungary excels in civil liberties, safety and health. Source: International Living, 2011

75 Thank you for your attention! For further information, please contact: Customer Services


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