Budapest Reaffirms Strategic Partnership with German Businesses

Published: December 06 2023

The Hungarian government reaffirmed its strategic partnership with German businesses operating in Hungary at an event organized by the German-Hungarian Chamber of Industry and Commerce in Budapest. German companies hold significant importance in the Hungarian economy and have consistently demonstrated their reliability, even during challenging times. The government is committed to supporting these partnerships through tax reductions and the reduction of administrative burdens.

German companies have a decisive weight in the Hungarian economy and contribute significantly to its growth and stability. Over the past decade, they have proven their reliability and commitment to the Hungarian market. The government recognizes their strategic importance and continues to prioritize their partnership.

Hungary's technical recession is over, and the economy has experienced growth since mid-November. The Hungarian work-based model has proven to be crisis-proof, and the labor market remains stable. International organizations and credit rating agencies are optimistic about the Hungarian economy, citing the strong basis for growth in the banking system and the high investment rate, which is the highest in the EU. In terms of investment, Germany remains the most important partner, with significant foreign direct investment in Hungary. The Hungarian Investment Promotion Agency (HIPA) has supported numerous German investment projects, creating thousands of new jobs. The aim is to further encourage investment in the country.

Although the economic outlook for Hungary is positive, the overall weak economic situation is impacting the business climate for German companies operating in Hungary. The results of a business survey conducted by the German-Hungarian Chamber of Industry and Commerce indicate negative economic expectations among companies in the region. German firms operating in Hungary are even more pessimistic than their counterparts in Germany. Many companies expect the general economic situation to deteriorate further, leading to weakened business expectations. Investment spending is also expected to decrease, reflecting a shift in priorities for some companies.

The strategic partnership between Hungary and German businesses remains strong, with the Hungarian government emphasizing its commitment to supporting these partnerships. While the Hungarian economy shows positive signs of growth and stability, concerns about the business climate exist, particularly among German companies operating in Hungary. Continued efforts to address these concerns and foster a favorable business environment will be crucial for maintaining the strong relationship between Hungary and German businesses.

What was stressed at the event organized by the German-Hungarian Chamber of Industry and Commerce in Budapest? The Deputy State Secretary for Macroeconomic and European Affairs stressed that the government continues to regard German companies operating in Hungary as strategic partners.

How important are German companies in the Hungarian economy? German companies have a decisive weight in the Hungarian economy.

Is Hungary optimistic about its economy? Yes, several international organizations and credit rating agencies are optimistic about the Hungarian economy.

What is the current state of the Hungarian labor market? The labor market in Hungary is stable and the Hungarian work-based model is crisis-proof.

How much foreign direct investment did Germany contribute to Hungary in 2021? Germany contributed foreign direct investment (FDI) worth EUR 18.2 billion in 2021, accounting for 20 percent of total Hungarian FDI.

How many German investment projects have been approved in Hungary between 2014 and the first half of 2023? 187 German investment projects worth EUR 9.5 billion have already been approved between 2014 and the first half of 2023, creating more than 30,000 new jobs.

What are the general economic expectations of German companies operating in Hungary? Half of the firms operating in Hungary expect the general economic situation to deteriorate further, and only 12 percent expect an improvement.

Is there a positive business climate for German companies in Hungary? The generally weak economic situation is having a negative impact on the business climate of German companies in Hungary.

Are German companies planning to increase or reduce their investment spending in Hungary? For the first time in ten years, more German companies are planning to reduce their investment spending (37 percent) than to increase it (25 percent).