Hungary

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    About the ILO in Hungary


    High growth rates might resume, but key labour market and social policy challenges remain

    Hungary began the transition to a market economy with some advantages over other Central European economies, with higher living standards and a more pragmatic economic policy initiated already before the fall of the Iron Curtain. After the regime change, the country took on the transformation of its economic system. An important milestone was the EU accession in 2004, which further accelerated economic convergence. 

    However, the catching-up process is slower than in other Visegrad Group (V4) countries. While Hungary’s per capita income was at 43% in 1991, in 2020 it was at 74% of the EU average, lower than in other V4 members. Its GDP growth rates (5% in 2018 and 2019) were among the highest in the EU before the Covid-10 pandemic, mainly driven by private consumption, investments (particularly in manufacturing), and EU funds. Hungary’s high integration in global manufacturing value chains led to a deep recession in the first year of the pandemic (-5%, 2020), but supports the recovery in 2021 because of the fast growth in global trade.    Continue reading