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HUNGARY


 

 

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 82,805 65,843 51,900 41
         
GNI per capita
 US $ 6,330 5,280 4,830 67
Ranking is given out of 208 nations - (data from the World Bank)

Books on Hungary




Update No: 115 - (21/12/06)

The record to date
In August 2004, Socialist prime minister Peter Medgyessy tendered his resignation after a cabinet dispute. The Hungarian Socialist Party (MSZP) chose businessman and sports minister Ferenc Gyurcsany as the new head of government.
Hungarian voters renewed their National Assembly on Apr. 9 and Apr. 23. The MSZP and the Alliance of Free Democrats (SZDSZ) secured 210 of the legislative branch's 386 seats, securing a full term for Gyurcsany.
In June, Gyurcsany introduced a fiscal "austerity package" of state subsidy reductions and tax increases, aimed at lowering the country's fiscal deficit from a projected 10.1 per cent this year, to 3.2 per cent in 2009. The prime minister has said Hungary might adopt the single European currency between 2010 and 2012.
In September, Gyurcsany was criticized after Hungary's state radio aired portions of an audiotape-which had been recorded in May-in which he told members of the MSZP that his administration "lied throughout the past one and a half or two years" about the state of the country's economy. He had also said that the government now had to get to grips with the economy and the people would have to face the realities.
Gyurcsany is an advocate of including all of the Western Balkan nations in the European Union (EU). On Nov. 27, he expressed his views on the topic, declaring, "Hungary acts properly if it uses all possible sources and takes all chances to help and speed up EU integration in the western Balkan region."
Gyurcsany 's poll rating improves to 30% in December
Public support for Gyurcsany is slowly growing in Hungary, according to a poll by Gallup Hungary. Some 30 per cent of respondents rate the prime minister's performance as good or very good, up six points since October.

Polling Data
How would you rate the performance of prime minister Ferenc Gyurcsany?
                                     Nov. 2006 Oct. 2006 Aug. 2006 
Good / Very Good     30%            24%         27%
Bad / Very Bad         59%            62%         61%
Source: Gallup Hungary

Methodology: Telephone interviews with 1,020 Hungarian voters, conducted from Nov. 8 to Nov. 14, 2006. Margin of error is 3.2 per cent.

Nevertheless public unrest mounts
Yet this means that there are still many more who disapprove of the premier than approve him and his government. There is indeed something amiss in the state of the country. In mid-December demonstrators set up partial roadblocks across Hungary and teachers staged a two-hour strike on Friday in unlinked protests aimed at the government. 
Anti-government protestors set up partial roadblocks to demand that "those responsible for the current moral and economic crisis in Hungary leave their jobs." 
The protests continue to be aimed at Prime Minister Gyurcsany, the man whose admission that he lied to the nation about the state of the economy before April's general elections sparked riots and widespread protests in September and October. 
However, Laszlo Garamvolgyi, spokesman for the national police, told MTI news agency that the roadblocks were causing no major delays. The roadblocks were expected to remain in operation until early evening. 
Meanwhile, thousands of teachers staged a two-hour strike in the morning in protest at a new law that means they can be forced to work extra hours without overtime pay. 
The strike was supported only by the smaller of the teachers unions, while the largest union said that it would call a strike in February if wage negotiations do not bring about results.
                                            ******

The following from a local analyst puts a positive spin on the situation. After all Thatcher had plenty of experience of demos and riots right until the end of her period in office:-

Britain's Thatcher Is Example for Hungary's Economy Minister 
By Balazs PenzDec
Britain's Margaret Thatcher provides the inspiration Hungary needs to tackle the European Union's largest budget deficit, Economy Minister Janos Koka told a meeting of employers and industrialists. The UK's prime minister from 1979 to 1990 ''made difficult and unpopular decisions which set Great Britain on a new course of development,'' Koka said at a meeting with the businessmen in Budapest today. ''She broke away from the false idea of the omnipotent state and let the private economy carry the country forward. As a liberal politician, I believe in the same thing.'' 
Prime Minister Gyurcsany already has raised Hungary's taxes and cut subsidies, aiming to shrink the country's budget deficit to 3.2 percent of gross domestic product in 2009 from an estimated 10.1 percent this year. He also plans to overhaul health care, pensions, education, transportation and public administration in his effort to reduce the shortfall. Thatcher led a list of Britain's best premiers in the past 100 years compiled in August for the BBC by historian Francis Beckett. Her policies included laws to erode the power of trade unions in favour of businesses and a shift in control of state- owned industries to investors through share sales of companies including BP Plc, BT Group Plc and British Airways Plc. Hungary has sold most of its state assets, from refiner Mol Nyrt. to phone provider Magyar Telekom Nyrt. since the early 1990s. An austerity package adopted in 1995 averted a fiscal crisis, and successive governments have used the proceeds of economic growth averaging 4.2 percent over the past decade to increase social spending. 
'Help Corporations Recover' 
''We have to do everything to help large corporations recover,'' Koka said. ''That way we can spend more money to help the elderly, the sick and the disabled. Profit will lead to the right way. Profit today will lead to higher investment, better pay and a better living standard tomorrow.'' Koka said his Free Democrats' Alliance, the junior partner in a ruling coalition led by Gyurcsany's Socialist Party, will tie its support of the government to how well it executes the economic overhaul in Hungary. ''I support conservative-liberal policies,'' he said. ''The role of the Free Democrats in the coalition is to be a sentry over the execution of these reforms.'' 

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AUTOMOBILES

Audi may build A3 Cabrio in Gyor 


German car manufacturer Audi is due to build its new A3 Cabrio models in Hungary only weeks after threatening to withdraw all investment from the country, an online financial publication claimed on November 24. Portfolio.hu said that despite the best efforts of certain Audi officials to promote building the car in Germany, the company would set up production in the Hungarian plant in Gyor, northwest Hungary. 
Audi would not officially confirm or deny the report. Audi, which has been granted tax breaks until 2011, had in October said it would suspend further investment in Hungary over the introduction of a new four per cent tax, dubbed the "solidarity" tax. 
However, after negotiations, the government provided a loophole that will allow companies to reduce the amount of income to which the solidarity tax can be applied, deducting research and development costs. Audi employs 5,200 people at its plant in Gyor, and has invested billions of dollars in Hungary since it set up the operation in 1993. 

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BANKING

OTP Bank gets Serbia's Kulska Banka 

Hungary's leading bank OTP said it had bought 26 per cent of Kulska banka and asked to buy an additional 67 per cent in the bank, website portfolio.hu reported on December 6th.
The bank agreed in July to buy Kulska Banka for 119 million. Jiri Stanik of Wood & Co commented on December 6th: "Following the failure to acquire a large bank (such as Vojvodanska or Jubanka), OTP had to build up its critical mass through purchasing and merging a number of small banks such as Kulska." Together with Niska Banka and Zepter Banka, OTP has already created a presence with a three per cent share on the Serbian banking market. Stanik further added: "With assets at 43 per cent and loans at 24 per cent of GDP only, Serbia offers plenty of growth. However, OTP operations are, and will be small relative to its overall size; therefore domestic, Bulgarian, Ukrainian and Russian businesses are the ones to matter and to watch for closely."

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ENERGY

E.On planning US$ billion investment 

German energy company E.On is planning to invest up to 200 billion forints (US$1.02 billion) in a gas-fuelled electricity plant in Hungary, business daily Napi Gazdasag reported on November 28th.
E.On's local subsidiary declined to comment on the report, but Napi Gazdasag said that concrete plans had been filed to the Hungarian Energy Office (MEH) and that E.On raised the capital of its subsidiary by 1.2 billion forints as a first step. The newspaper said that the MEH were reportedly prepared to give permission for the 400-MW plant within the next 120 days. 

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FOREIGN INVESTMENT

Cisco to expand further investments 

Investments in Hungary are generally on the rise and the latest contributor became Cisco, the leading supplier of networking equipment and network management for the Internet, website portfolio.hu reported. 
In a statement published on November 29th, the company divulged its plans of further expansion of its services in Hungary. The company opened its Technical Assistance Centre (TAC) in Budapest in April 2005. Now it has announced plans for setting up a new services centre in Szombathely to offer technical services linked to hardware repair and development works, the website reported. 
The new facility would be jointly established with the local unit of electronics solutions company, according to the Cisco statement. However, the financial details involved with the pan were kept undisclosed. Jabil, which provides comprehensive electronics design, production and product management services to global electronics and technology companies, has been in cooperation with Cisco for more than eight years. The statement revealed that the Szombathely unit would handle repair and testing and offer quality and process and supply management services. The facility will also be a base for clients in Europe, Russia, the Commonwealth of Independent States (CIS), the Middle East and Africa. Jabil started producing Cisco products at its Tiszaujvaros plant in 2002. The Szombathely-based Jabil centre employs 600 people and the collaboration with Cisco plans to add 50 more heads to the payroll, the website reported. 

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FOREIGN RELATIONS

Hungarian premier visits western Balkan leaders 

Hungarian Prime Minister, Ferenc Gyurcsany, recently visited the western Balkan region, meeting the leaders of Macedonia, Bosnia and Albania, an official told AENews on November 20th.
Gyurcsany made his first stop in Bosnia-Herzegovina for talks with government leaders and the chairman of the House of Peoples and the House of Representatives, government spokeswoman Emese Danks said. In Macedonia, Gyurcsany met with his counterpart and other leaders. According to Maxfax news agency, the Hungarian premier said that a realistic timeframe for inviting Macedonia to join NATO is 2008, whereas for accession to the European Union, difficult work lies ahead for the country. He also said that Hungary would back Macedonia at the Riga Summit, Maxfax reported. 
On the third and final day of his Balkan tour, Gyurcsany visited the Albanian capital, Tirana to attend a Central European conference and meet with Albanian Prime Minister Sali Berisha, President Alfred Moisiu and the parliament chairman.

 

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