HUNGARY

Low FX reserves are a concern as Covid-19 has hit the economy

B2

MEDIUM RISK for entreprise

  • Economic risk

  • Business environment risk

  • Political risk

  • Commercial risk

  • Financing risk

The country risk assessments are your North Star metrics to make the right decision for your business and understand the risks in international trade. We have always the best solution for your needs

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GDP USD160.967bn (World ranking 56, World Bank 2019)
Population 9.77mn (World ranking 92, World Bank 2019)
Form of state Parliamentary Republic
Head of government Viktor ORBAN (Prime Minister)
Next elections 2022, presidential and legislative
  • Generally stable parliamentary democracy
  • EU membership
  • Strong, competitive manufacturing base
  • Deteriorated investment climate, as a consequence of unconventional economic policy measures since 2010
  • At times, difficult relations with the IMF and the EU
  • High public debt and large total external debt burden
  • Exchange rate vulnerability
  • Low level of FX reserves – import cover below three months
  • Vulnerable banking sector

Trade structure by destination/origin

(% of total)

Exports Rank Imports
Germany 26%
1
27% Germany
Romania 6%
2
8% China
United States 5%
3
6% Poland
Slovakia 5%
4
5% Czech Republic
Italy 4%
5
5% Slovakia

Trade structure by product

(% of total)

Exports Rank Imports
Road vehicles 18%
1
13% Electrical machinery, apparatus and appliances, n.e.s.
Electrical machinery, apparatus and appliances, n.e.s. 12%
2
10% Road vehicles
Power generating machinery and equipment 10%
3
6% Other industrial machinery and parts
Telecommunication and sound recording apparatus 7%
4
6% Power generating machinery and equipment
Medicinal and pharmaceutical products 4%
5
5% Telecommunication and sound recording apparatus
The conformity of domestic law with EU rules on late payment in business-to-business transactions unfortunately does not protect traders from the uncertain payment behavior of domestic companies, with the average payment term at over 35 days.

  • Low

  • Medium

  • Sensitive

  • High

  • Payments

  • Court proceedings

  • Insolvency proceedings

When considering legal action, it is worth keeping in mind that domestic courts are known for the lengthy and costly nature of their proceedings. In fact, commencing legal action in Hungary would be unreasonable in most cases and pre-legal collection efforts remain the only effective option

Although domestic insolvency law aims at rescuing companies to increase the chances of recovering debts, it provides no limitations as to how much of the debt may be written off in restructuration negotiations and it is rare for unsecured creditors to recover from insolvent debtors in practice.

Contact

Euler Hermes

Economic Research Team

research@eulerhermes.com

Manfred Stamer

Senior Economist for Emerging Europe and the Middle East

manfred.stamer@eulerhermes.com

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