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Hungary: facts and figures

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1 Hungary: facts and figures
Key factors of competitiveness

2 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 Hungary PPP (EUR): Eurostat ( ) PPP (USD): Eurostat ( ) ECB Exhange Rate (2012): EUR/USD Hungary is located in the heart of the European continent and occupies 1% of it. With its favorable geographical location the country is at the crossroads of main commercial routes. From Hungary, a market of some 250 million people can be reached within 600 miles. Land area: km2 Population (2010): 10 million Population density: people/square km Constitutional form: Republic Government: parliamentary democracy Capital: Budapest (population:1.8 million) Official language: Hungarian (Hungarian 97.7%, other 2.3%) Religion: Roman Catholic 67.5%, Calvinist 20%, Lutheran 5%, Other 7.5%, Currency: Hungarian forint HUF Major cities: Budapest (population: ), Debrecen (population: ), Miskolc (population: ), Szeged (population: ), Pécs (population: ), Győr (population: ) The largest rivers: Danube (section in Hungary: 417 km), Tisza (section in Hungary: 596 km), Lajta, Rábca, Rába, Zala, Dráva, Ipoly, Zagyva, Sajó, Hernád, Bodrog, Szamos, Hármas-Körös, Maros The largest lakes: Lake Balaton (596 square km), Lake Velence (26 square km), Lake Fertő (Southern part 75 square km) Regions: Central Hungary, Northern Hungary, Southern Transdanubia, Northern Great Plain, Western Transdanubia, Central Transdanubia, Southern Great Plain Hungary’s GDP/capita stands at 66% of the EU average. (Eurostat, 2012) Land: 93,030 km² Population: ~10 million GDP/capita, at PPP (2012): EUR 16,700/ USD 21,456 Source: Eurostat, IMF

3 Export of goods and services
Overview 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) EU GDP Export of goods and services Employment and wages Frissítve: Tendenciák: Exchange rate: 2012 yearly average GDP volumen vált. (%) 0,9 -6,8 1,1 1,6 -1,7 export volumen vált. (%) 5,7 -10,2 11,3 8,4 1,7 bruttó átlagkereset (Ft) munkanélküliségi ráta (%) 7, ,2 10,9 10,9 infláció (%) 6,1 4,2 4,9 3,9 5,7 költségvetési egyenleg (GDP %-a) -3,7 -4,6 -4,3 4,3 -2 Az előrejelzések a szeptemberi költségvetési törvénytervezetet tükrözik. GDP growth (2013Q3): 1,7% (Source: HCSO, preminilary data published on 14th November 2013, the final will be published on the 4th December 2013) Forecast (2013): +0.9% (Source: Draft Budget 2014) Export volume growth (2012): +1.7% (Source: 2014 Draft Budget) (ez az adat a GDP felhasználás volumenindexe; az árukereskedelem értéknövekedése tavaly 3,6%-os volt forintban, míg euróban 0%-os, dollárban pedig -7,5%) Forecast (2013): 4.5% (Source: 2014 Draft Budget 2014) Average gross wage (2012)*: €770.5; $989,8 (Source: HCSO) (STADAT: Az alkalmazásban állók havi bruttó átlagkeresete a nemzetgazdaságban: Ft) Unemployment rate (2013 Jun-Aug): 9.8% (Source (HCSO) Inflation rate (Sept 2013): 1.4% (Source: HCSO) Forecast (2013): 1.9% (Source: Draft Budget 2014) Government balance (2012): -1.9% (Source: HCSO) Forecast (2013) : -2.7% (% of GDP) (Source: Draft Budget 2014) Inflation Budget balance Source: HCSO, Draft Budget 2014 *Exchange rate: 1 €= HUF, 1 $=225,37

4 Economy and Economic Policy

5 Nominal GDP in Hungary million EUR Frissítve: 2013.11.06.
Source: Eurostat

6 Nominal GDP in Hungary million USD Frissítve: 2013.11.06.
US dollar/Euro : 1, ,392 1, , , ,3705 1, , , ,1312 Source: Eurostat

7 Gross Value Added by sectors in Hungary (2012)
Frissítve: Sectors by NACE Rev. 2 : Statistical classification of economic activities in the European Community Price (previous year prices): Current price The category „Others” includes: Human health and social work activities, Construction, Administrative and support service activities, Electricity, gas, steam and air-conditioning supply, Other services, Accommodation and Food service activities, Water supply, sewerage, waste management and remediation, Arts, entertainment and recreation, Mining and quarrying, Activities of households as employers Source: Hungarian Central Statistical Office

8 International trade of Hungary
Year Import (Million €) Export Total Trade (Million €) Trade Balance (Million €) 2008 73,699.71 73,380.29 147,080.01 2009 55,401.18 59,139.32 114,540.50 3,738.14 2010 65,933.67 71,448.82 137,382.49 5,515.16 2011 72,916.88 79,977.57 152,894.45 7,060.70 2012 73,297.49 79,952.02 153,249.52 6,654.53 Frissítve: Source: Hungarian Central Statistical Office

9 International trade of Hungary
Year Import (Million $) Export Total Trade (Million $) Trade Balance (Million $) 2008 108,820.32 108,233.10 217,053.41 2009 77,273.44 82,572.17 159,845.61 5,298.73 2010 87,434.15 94,749.27 182,183.42 7,315.12 2011 101,375.45 111,217.66 212,593.11 9,842.21 2012 94,307.66 102,830.36 197,138.02 8,522.70 Frissítve: Source: Hungarian Central Statistical Office

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

11 Main trade partners of Hungary (2012)
Main Import Partners (2012, Million EUR) Germany 18 048 Russia 6 405 Austria 5 163 China 4 206 Slovakia 4 146 Poland 3 420 Italy 3 241 Netherlands 2 943 France 2 647 Czech Republic 2 609 Main Export Partners (2012, Million EUR) Germany 19 990 Romania 4 767 Slovakia 4 705 Austria 4 598 Italy 3 721 France 3 689 United Kingdom 3 322 Czech Republic 3 102 Poland 3 031 Russia 2 553 Frissítve: Source: Hungarian Central Statistical Office

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

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

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

15 Internationalized, open economy
Trade to GDP ratio (%) 2011 (Exports + Imports) / (2 x GDP) Source: IMD World Competitiveness Online 2012

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

17 Export of goods Percentage of GDP (2000-2011)
Source: IMD World Competitiveness Online 2012

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

19 Medium term economic outlook
Forecast of main economic indicators 2012 2013 2014 2015 2016 GDP growth (%) -1.7 0.9 2.0 2.3 2.5 Inflation (%) 5.7 1.9 2.4 3.0 Current account balance (% of GDP) 1.6 3.2 3.3 3.1 2.9 Export growth (%) 1.7 4.5 5.8 6.1 Budget balance (% of GDP) -2.7 -2.9 -2.6 -2.4 Government debt (% of GDP) 79.2 77.4 76.9 - Frissítve: Source: Draft Budget 2014

20 Hungarian Economic Policy 2013
Short overview of aims and achievements

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 Source: Kormany.hu EU Comission Report Updated:

22 Achievements 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% Source: Kormany.hu EU Comission Report Updated: Financial consolidation Since the third quarter of 2011, the external debt of the Hungarian economy has decreased by some 18.7% of GDP. The budget deficit has been succesfully kept below 3% of GDP in 2012, and the Government is committed to keeping it at the same level in 2013 and 2014. In June 2013 the European Commission decided to abrogate the excessive deficit procedure (EDP) against Hungary, which was initiated in 2004. The draft budget bill expects the yearly inflation rate to be 1.9% for 2013 and 2.4% for 2014 Labour market tendencies Employment has been rising steadily since the second half of 2010 In the period June-August 2013, employment raised by 1.7% compared to the same period of the previous year

23 Achievements 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. Strategic cooperation agreements about introducing dual vocational training, increasing the proportion of local suppliers, increasing R&D capacities in Hungary are concluded with the local units of large foreign corporations. Source: Kormany.hu EU Comission Report Updated: Tax system Transformation of the tax system means a gradual move from income taxes based system to a consumption taxes based one The flat-rate tax system was introduced with a 16% flat-rate personal income tax from 2013 (first introduced in 2012, and fully applicable from 2013) A corporate tax rate of 10% applies to tax base up to HUF 500 million Business environment The Government has concluded more than 30 strategic cooperation agreements and several agreements are expected to be signed in the near future Structural reforms Ongoing and concluded reforms of the pension system, public transport, higher education, state and municipal financing etc.

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 Act I of 2012: The New Labor Code Effective as of July 1, 2012 1. Main purpose: to create a labor law system which is in line with new market conditions (with a greater acknowledgement of the needs of the service industry and SMEs) 2. employments established for a definite period can also be terminated by (ordinary) notice in following cases: During bankruptcy and liquidation proceedings;Grounds based on the incapacity of the employees; and If the maintenance of the employment becomes impossible due to external reason out of the parties’ control, If the maintenance of the employment becomes impossible or disproportionally difficult with respect to the employee’s circumstances 3. Extra work: former 200 hours/year 4. Atipical forms of employment: Employment established for definite period of time (határozott idejű munkaviszony) Employment on call (munkavégzés behívás alapján) Job sharing (munkakör megosztás) Shared employment relationship, i.e. employment at more employers (több munkáltató által létesített munkaviszony) Teleworking (távmunkavégzés) Outside working (bedolgozói munkaviszony) Simplified employment or occasional employment (egyszerűsített foglalkoztatás; alkalmi munka) More flexibility: Please note: in each chapter, there is a list of paragraphs where deviation from the main rules is prohibited or, in the case of collective agreements, where the deviation is allowed only in favor of the employees) Frissítve:

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 Frissítve:

26 disadvantaged employees (elderly, young and unskilled people)
Job protection action plan Contribution allowances up to a certain level of wage 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 Certain level of wage: HUF (338 EUR; 443 USD) Árfolyam ( féléves átlag): EUR: 296,13; USD: 225,5 Frissítve: 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 for five prioritized groups up to a gross wage of 100 thousand forint. The changes came into force from 1st Jan, The contribution allowances are available for every employer. 1, 2, Employees below the age of 25 years and employees above the age of 55 years Employer’s costs are being reduced for young and elderly employees. The contributions payable by the employer has been cut from 28.5% with 14.5%. The new rate is at 14%. Further, in case of employing entrants below the age of 25 years, in the initial two years no contribution is payable by the employer. 3, Employees who are unskilled People who work in a job which doesn’t require qualification also get a 14.5 percent tax allowance. The new rate is at 14%. 4, long-term unemployed people The government reduced employer liabilities for reemployed people by 100 percent in the initial two years of employment and from the third year on payable contributions will be half (14%) as much as they were in 2012. , mothers with small children In order to enhance the job prospects of mothers with small children if they return to work from child care/maternity leave no contribution payment is required in the initial two years and only half (14%) of the former liabilities from the third year. Átírva: REDUCTION OF THE NUMBER OF MINOR TAXES The abolition of accident tax and the fire protection contribution are measures that practically reduce the number of taxes. Beside these, the following taxes are to be eliminated:  pharmacy solidarity tax  98% special tax paid by private persons  disaster-relief contribution

27 FDI in Hungary

28 Stock of Foreign Direct Investments in Hungary
Million EUR Repurchase of MOL shares ; Devaluation of HUF New methodology from 2008 2012-ben rekord mértékű működő tőke érkezett hazánkba, a 10,69 milliárd eurónyi FDI a végi állomány mintegy 14%-a. A kiemelkedően magas számot azonban harmadrészt az árfolyó tőke magyarázza, ami egyszerre tőkekiáramlásként is megjelenik a statisztikában, így nem jár reálgazdasági hatással. Másrészt megközelítőleg a beérkezett tőke harmadáért felel egy első negyedévi egyszeri eszközportfólió-átrendezés, ami szintén megjelenik tőkekivitelként is. Így a fenti két tényezőnek köszönhetően statisztikailag a magyarországi tőkekivitel is rekord értéket ért el a tavalyi évben. Kiemelendő, hogy - ahogy az NGM is hangsúlyozta - a működőtőke-beáramlás és a magyarországi vállalatok általi működőtőke-kivitel egyenlege 2008 óta a legkedvezőbb, mintegy 2,2 milliárd euró volt. Source: National Bank of Hungary, 2013

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

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

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

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

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

34 UNCTAD FDI Contribution Index, 2012
Rank Region/Economy 1 Hungary 2 Belgium 3 Czech Republic 4 Romania 5 Hong Kong, China 6 Poland 7 Malaysia 8 Estonia 9 Bolivia 10 Colombia 11 Switzerland 12 Sweden 13 Singapore 14 Finland 15 United Kingdom Hungarian economy has the largest contribution by FDI therefore achieved the first position. The UNCTAD FDI Contribution Index ranks economies on the basis of the significance of FDI and foreign affiliates in their economy, in terms of value added, employment, wages, tax receipts, exports, R&D expenditures, and capital formation (e.g. the share of employment in foreign affiliates in total formal employment in each country, and so forth). These variables are among the most important indicators of the economic impact of FDI.

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 Coloplast: Coloplast has accepted the official incentive offer of the Hungarian Government on 25/09/2013. The investment worth 40,8 million euro and aims to expand its medical devices manufacturing facility in Nyírbátor and in Tatabánya as well. The company has already more than 1900 employees and will create 701 new workplaces by the end of the new project. OPEL: Opel will expand its manufacturing facility in Szentgotthárd with an investment of 60 million euro. (July 2013) ZF Lenksysteme: In addition to its existing facility in Eger, ZF Lenksysteme GmbH, a joint venture of ZF Friedrichshafen and Bosch, is building a new plant in Maklár investing over 80 million euros. The production capacity will be increased by some 23,000 square meters on a total area of about 180,000 square meters, in the interest of assembly of the EPSapa power steering systems developed by ZFLS. Hankook: Hankook has decided to expand its tyre factory in Rácalmás with an investment of 303 million euro and has accepted the incentive offer on 28/05/2013. Within the framework of the previous project the comapny created 1508 new workplaces and now commited to create 950 new jobs. Hewlett-Packard:HP Hungary currently employs 2,300 people, including 1,500 in its Shared Service Centre in Budapest. This number will increase further, the company announced it is creating 175 new jobs in Hungary. The new branch will provide IT customer care to an insurance company. Sauflon: Sauflon is the biggest contact lens manufacturer in the region with 199 employees and now according to the accepted incentive offer on 28/05/2013 will invest euro in Gyál creating 180 new workplaces. Procter&Gamble: PG’s new green-field investment, in the city of Gyöngyös, worth 59,5 million Euros will be the company’s second production facility in Hungary new jobs will be created to produce Pampers products, which will be sold on international markets in Europe, Middle East and Africa. General Electric: GE has announced the expansion of its existing oil and gas facility in Fót, Hungary. The GE Oil & Gas manufacturing plant will be expanded with a new 6,000-square-meter manufacturing hall, along with an office building. The company will supply the new products and solutions worldwide from its Fót facility. Greif: After conducting manufacturing operations in Hungary, in Almásfüzítő for more than two decades, Greif has decided to locate financial shared services also to Hungary. The company will employ 70 people in Budapest in its shared service centre. Bridgestone: As the largest tire manufacturing company in the world, Bridgestone built a plant in Tatabánya in With the new investment, which started in 2012, 505 new workplaces will be created, by an investment worth 237 million euros. Jabil: - Thai President Foods: Thai President Foods is one of the world's 10 largest instant noodle manufacturer. In 2013 second quarter the company has chosen Hungary for its Central European instant noodles manufacturing facility. Hence Esztergom will be the selected place for the brownfield investment project which facility will suply the European market in the future. The parent company has just invested HUF 2.35 billion (cap-ex) to establish a limited liability company in May In the first phase of the project 30 workplaces will be created in Esztergom. Systemax: Systemax’ EMEA Pan-European Technology Products Group announced the establishment of a new shared service center in Budapest, Hungary in January 2013 to support the Company’s expanding pan-European footprint. In the first phase of the project the company creates 200 jobs for IT and HR functions, while in the second phase further 305 headcounts and finance functions will be added. Bosch: Bosch is a leading automotive company which already has 940 people working in its commercial business unit. On 19/03/2013 Robert Bosch has accepted the incentive offer of the Hungarian Government, hence the company will expand its R&D facility in Budapest with an investment value of 60 million euro and creating 500 new workplaces. Flextronics: new production hall in Cserkút, 200 new jobs Samsung: New production facility established in 2013 (the 22 thousand square-metre production hall in Jászfényszaru–valued 30 million US dollars – will create one hundred new jobs DHL: New warehousing and office centre of DHL Global Forwarding and DHL Freight-Budapest (Airport) Infineon: Infineon Technologies AG is a semiconductor manufacturer manufacturing capacity expansion in Cegléd. The company has accepted the incentive offer on 09/10/2013. The investment will create a new, square-metre production hall and more than 500 new workplaces.

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

37 Competitive tax system Flat personal income tax: 16%
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% CEE countries Corporate income tax Slovakia 23% Czech Republic 19% Poland Slovenia 17% Romania 16% Hungary 10-19% Exchange rates: (average of S1 2013) HUF/EUR 225,5 HUF/USD R&D tax incentives: R&D direct costs or depreciation of activated/accounted R&D can be 100% deducted from corporate tax base. 300% R&D direct expenses - maximum HUF 50 M (approx. EUR 160 K) - if operation of the company R&D unit located at university or public research institute can be deducted from corporate tax base. 3. From 2013 enterprises are entitled to tax relief for employing researchers with academic grades or titles. The tax relief means that the rate of social contribution tax payable on gross wages is 0 percent, up to a monthly gross amount of HUF 500,000. Source: KPMG, 2013 November *: effective tax rate 37

38 Competitive Labour Costs
Labour cost levels [lc_lci_lev] Last update Extracted on Source of data Eurostat Short Description Short Description is not available CURRENCY Euro (from )/ECU (up to ) LCSTRUCT Total labour costs (total) NACE_R2 Industry, construction and services (except public administration, defense, compulsory social security) Frissítve Source: Eurostat

39 Competitive Labour Costs
Árfolyam EUR (US dollar ) Labour cost levels [lc_lci_lev] Last update Extracted on Source of data Eurostat Short Description Short Description is not available CURRENCY Euro (from )/ECU (up to ) LCSTRUCT Total labour costs (total) NACE_R2 Industry, construction and services (except public administration, defense, compulsory social security) Készült Source: Eurostat

40 Total hourly labour costs in the services of the business economy, 2012, (€)
Árfolyam: EUR (US dollar ) EUROSTAT Labour cost levels [lc_lci_lev] Last update Extracted on Source of data Eurostat CURRENCY Euro (from )/ECU (up to ) LCSTRUCT Total labour costs (total) NACE_R2 Services of the business economy Frissítve: Source: Eurostat

41 Total hourly labour costs in the services of the business economy, 2012, ($)
Árfolyam: EUR (US dollar ) EUROSTAT Labour cost levels [lc_lci_lev] Last update Extracted on Source of data Eurostat CURRENCY Euro (from )/ECU (up to ) LCSTRUCT Total labour costs (total) NACE_R2 Services of the business economy Készült: Source: Eurostat

42 Competitive average wages
Gross wages, industry (BCD - NACE Rev. 2) EUR Source: wiiw Monthly Database Tree Level 1: Wages Update: - Extracted on: :45:53 MNB HUF Árfolyam: EUR: 295,16 USD:226,18 Frissítve: Source: wiiw, Eurostat, national statistics

43 Competitive average wages
Gross wages, industry (BCD - NACE Rev. 2) EUR Source: wiiw Monthly Database Tree Level 1: Wages Update: - Extracted on: :45:53 MNB HUF Árfolyam: EUR: 295,16 USD:226,18 Készült: Source: wiiw, Eurostat, national statistics

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

45 GDP(PPP) per person employed per hour
Labour Productivity GDP(PPP) per person employed per hour Estimates: GDP (PPP) per person employed per hour, US$ (Updated: MAY 2012) PPP (purchising power parity) Frissítve: Source: IMD World Competitiveness 2012

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

47 Labor regulations favor business activities
IMD, Regulations (hiring/firing practices, minimum wages, etc.) Executive survey based on an index from 0 to 10 (2012) Új kiadványra váárunk Source: IMD, World Competitiveness Online 2012

48 Unemployment legislation provides an incentive to look work for
IMD, Executive survey based on an index from 0 to 10 (2012) Új kiadványra várunk Source: IMD, World Competitiveness Online 2012

49 Well trained, creative and flexible human capital
Higher education Well trained, creative and flexible human capital Number of institutions in higher education 68 Number of locations Number of students in higher education 360,000 Majoring in: Business and Administration ,923 Technical edu ,388 Informatics ,724 Foreign languages 9,113 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 Source: Ministry of Human Resources: Statistical Yearbook of Education 2011/2012 Number of institutions, locations, students:12. oldal Majoring in: 17. tábla (PhD és DLA nélkül) ISCED 34 ISCED 52,54,58,62 ISCED 48 ISCED 222 Educatio Nonprofit Kft Frissdiplomások 2012, Kutatási zárótanulmány (nyelvtudás) Frissítve: Academic year 2011/2012

50 High Proficiency English Language Skills
The EF English Proficiency Index 2012 English Proficiency Index (Education First) The EF EPI benchmarks English proficiency across 54 countries using a sample of just under 2 million people Frissítve: Source: EF EPI English Proficiency Index 2012

51 Quality of math and science education in V4 countries (2013)
SOURCES of WEF: UNESCO Institute for Statistics (accessed June 21, 2013, and April 21, 2013); ChildInfo.org Country Profiles; national sources Frissítve: Source: World Economic Forum: Global Competitiveness Report

52 University education meets the needs of a competitive economy
IMD, Executive survey based on an index from 0 to 10 (2012) Kiadványra várva Source: IMD, World Competitiveness Online 2012

53 Intellectual property protection in V4 countries (2013)
Score:1-7 In your country, how strong is the protection of intellectual property, including anti-counterfeiting measures? [1 = extremely weak; 7 = extremely strong] | 2012–13 weighted average 1.02 Frissítve: Source: World Economic Forum: Global Competitiveness Report

54 Strong scientific capacity
Country Ranking Israel 1 Switzerland 2 United Kingdom 3 Germany 6 Japan 9 Ireland 14 Hungary 21 Austria 23 Spain 36 Italy 40 China 41 Poland 55 Romania 64 Slovak Republik 70 The quality of scientific research institutions The World Economic Forum ranks Hungary No. 21 within 148 countries WEF Global Competitiveness Report (2.2 Data tables, Selection XII. Innovation, Quality of scientific research institution Frissítve: Source: WEF Global Competitiveness Report,

55 Utility patents granted/million population (2013)
12.07 PCT patent applications Number of applications filed under the Patent Cooperation Treaty (PCT) per million population | 2009–10 average SOURCE: Organisation for Economic Co-operation and Development (OECD), Patent Database, as of June 2013; World Bank, World Development Indicators Online (retrieved April 21, 2013); Authors’ calculations. For more details, refer to the section “Technical Notes and Sources.” Frissítve: Source: World Economic Forum: Global Competitiveness Report

56 Quality of research institutions in V4 countries (2013)
12.02 Quality of scientific research institutions In your country, how would you assess the quality of scientific research institutions? [1 = extremely poor—among the worst in the world; 7 = extremely good—among the best in the world] | 2012–13 weighted average Frissítve: Source: World Economic Forum: Global Competitiveness Report

57 Availability of scientists and engineers in V4 countries (2013)
12.06 12.06 Availability of scientists and engineers In your country, to what extent are scientists and engineers available? [1 = not at all; 7 = widely available] | 2012–13 weighted average Frissítve 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 The focal point for logistics activity is moving eastwards as companies gravitate to the centre of an enlarged Europe. Hungary's strategic position in the heart of the continent, as well as its role as one of the major transport junctions in the Central East European region, makes it increasingly important as a regional distribution centre. Thanks to Hungary’s highly developed transport infrastructure and an established background in logistics, companies can benefit from remarkably high efficiency and added value - enabling them to dramatically improve the quality of their services. Advantages: Proximity and easy access to growing Central and South-eastern European and CIS markets Hungary is situated at the cross roads of four main European transportation corridors The road and railway transportation network is extensive and it is under continuous development The country has highly developed logistics, transportation and telecommunications infrastructure; European transport corridors passing through Hungary: Nr. IV. from Northern Germany/North-Sea to the Black Sea, Nr V.from the Adriatic Ports to Kiev- Moscow, Nr. X. the North-South corridor from Baltic states to Turkey and Greec Nr. VII. - the Danube river and Rhine-Main Chanel, from the North-Sea

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 Motorways density, Kilometres per km2 Hungary 14 Közép-Magyarország 40 Dunántúl 15 Közép-Dunántúl 23 Nyugat-Dunántúl 15 Dél-Dunántúl 9 Alföld és Észak 9 Észak-Magyarország 13 Észak-Alföld 7 Dél-Alföld 8

61 Road density km/km2 IMD, 4.1.12. data from 2010
Total railway lines Kilometres per km2 Hungary 83 Közép-Magyarország 114 Dunántúl 84 Közép-Dunántúl 104 Nyugat-Dunántúl 69 Dél-Dunántúl 80 Alföld és Észak 78 Észak-Magyarország 117 Észak-Alföld 52 Dél-Alföld 76 Source: IMD, World Competitiveness Yearbook, 2012

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

63 Density of the railroad network
km/km2 IMD, data from 2010 Total railway lines Kilometres per km2 Hungary 83 Közép-Magyarország 114 Dunántúl 84 Közép-Dunántúl 104 Nyugat-Dunántúl 69 Dél-Dunántúl 80 Alföld és Észak 78 Észak-Magyarország 117 Észak-Alföld 52 Dél-Alföld 76 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)
Frissíve: 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 Példák SSC-kre: Morgan Stanley, BT, Vodafone, Citibank, BP, Diageo, AVIS, ZTE

67 Lively Office market „A” class offices
Stock in Budapest (2013 H1): 3,164,000 m2 Average rental price (headline rents) : Budapest EUR 10-13/m2/month (non-central submarkets) EUR 12-15/m2/month (central submarkets) EUR 7-10/m2/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 Source: CBRE 2013 H1

68 Ready-made industrial sites
More than 210 industrial parks are available for manufacturing activity 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 Nyíregyháza, IP Tatabánya, IP

69 Developed Industrial Sites Southern Transdanubia
Average indicative prices by regions 2012 Northern Hungary 18.3 13 Central Hungary Northern Great Plain Western Transdanubia Central Transdanubia 16.6 8.8 29.5 30.1 21.9 17.5 19.7 19.2 Average land prices in the industrial parks by regions (EUR/m2 + VAT) Average land prices in industrial or other development sites (out of parks) (EUR/m2 +VAT) Southern Great Plain Southern Transdanubia 10.7 20.1 16.9 10 Source: Hungarian Investment and Trade Agency The land prices depend on the condition of the sites (eg. utility capacities, location)

70 Southern Transdanubia
Manufacturing halls Average indicative prices and rental fees by regions 2012 Northern Hungary 265 3.3 Central Hungary Northern Great Plain Western Transdanubia Central Transdanubia 280 3.4 397 4.1 309 4.0 241 4.1 Average prices of manufacturing halls by regions (EUR/m2 + VAT) Average rental fees of manufacturing halls by regions (EUR/m2/month +VAT) Southern Great Plain Southern Transdanubia 285 3.7 222 3.3 The hall prices and rental fees depend on the condition of the sites (eg. utility capacities, location) Source: Hungarian Investment and Trade Agency

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

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
Every January, International Living ranks and rates 194 countries to come up with their list of the places that offer you the best quality of life. This isn't about best value, necessarily. It's about the places in the world where the living is, simply put, great. To produce this annual Index they consider nine categories: Cost of Living, Culture and Leisure, Economy, Environment, Freedom, Health, Infrastructure, Safety and Risk, and Climate. This involves a lot of number crunching from "official" sources, including government websites, the World Health Organization, and The Economist, to name but a few. They also take into account what their editors from all over the world have to say about their findings. How the numbers are crunched To rate and rank the 194 countries considered in this year’s Quality of Life Index, they took into account: Cost of Living (15% of the final ranking). This is a guide to how much it will cost you to live in a style comparable to—or better than—the standard of living you’re likely enjoying in the U.S. their primary stheirce in this category is the U.S. State Department’s Index of Overseas Living Costs, used to compute cost-of-living allowances for a Western-style of living in various countries. They also consider each country’s income tax rates. Culture and Leisure (10%). To calculate this score, we look at literacy rate, newspaper circulation per 1,000 people, primary and secondary school enrollment ratios, number of people per museum, and a subjective rating of the variety of cultural and recreational offerings. Economy (15%). they consider interest rates, GDP, GDP growth rate, GDP per capita, the inflation rate, and GNP per capita to determine each country’s Economy score. Environment (10%). To figure a country’s score in this category, they look at population density per square kilometer, population growth rate, greenhouse emissions per capita, and the percentage of total land that is protected. Hungary excels in civil liberties, safety and health. Source: International Living, 2011

75 Thank you for your attention!
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