Transcript Welcome by HE Péter Szabadhegy Ambassador of Hungary

Ambassador of Hungary
HE Péter Szabadhegy
Hungary’s Place in the Heart of Europe
John Lennon Airport, Liverpool
October 1, 2015
Hungary’s historic and geographic
place in Europe
Basis of the Hungarian State
King Stephen in 1000 AD converted to the Catholic
faith and was crowned under the blessing of the
Pope, clearly placing HU in the Western world
Cross-roads of geopolitical crossfires
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HU under King Mátyás (1458-1490)
150 years of Ottoman rule
1848-49 HU Freedom fights (against Austria – Habsburgs)
HU lost 2 World Wars with the Iron Curtain being raised on its
Western borders (Soviet troops left Austria in 1955)
 1956 revolution
 1989 peaceful transition
Euro-Atlantic integration → re-integration
 Hungary played the primary role in the dismantling
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of the Berlin Wall, the raising of the Iron Curtain
 1989 peaceful transition
 NATO accession 1999
 Western- Balkans
 Iraq
 Afghanistan
 Uganda
 Montenegro
 EU accession 2004
 Part of Schengen-zone
 Not yet part of Euro-zone
Source: Eurobarometer Factsheet 2015
Hungary – In the Heart of Europe
Your gate to a market of
500 million customers
 Population: 9,877,365
 Area: 93,030 km2
 Capital: Budapest
(ca. 1,740,000 ppl)
 HU has 7 neighbors (2
non-EU members)
 ca. 5 million of
Hungarians are living
outside its borders
Logistics
Excellent access to key markets
 Junction of 4 main Europeantransportation
corridors
Extensive road and railway transportation
network
 High road density
 Rail transport carries more than 20 % of total
trade – well above the EU average
Highly developed logistics and
telecommunications infrastructure
Hungary:
a re-invigorated nation
Hungary on the verge of collapse in 2010
 Government debt was at 85%
 Most of the 2,049 local governments were indebted
 Every second Hungarian citizen was seriously indebted
 Mainly with foreign currency (chf) loans
 1.8 million people were paying taxes (10 mil. population)
 Employment participation close to 50%
 500,000 people in early retirement
Hungarian Parliamentary Election Results
Election Results % (nr. of seats )
Party
2010
2014
FIDESZ-KDNP
68.16% (263)
66.8% (133)
MSZP
15.3% (59)
Coalition (MSZP-EGYÜTT-DK-PM-MLP)
19.1% (38)
JOBBIK
12.2% (47)
11.6% (23)
LMP
4.1% (16)
2.5% (5)
Non-affiliated
0.26% (1)
Total:
100% (386)
100% (199)
Historic landslide re-election – how and why could this happen?
What is
the Hungarian recipe for success?
Fundamental Law (2011)
Need for change:
 Legal & political reasons
 The 1989 Constitution
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was
completely revised ↔ still it
was the old Soviet model-based
constitution
The 1989 Constitution declared
itself temporary
Post 2006: political
and
economic crisis
Neo-liberal economic policies
failed, the state was weak
Pessimistic, disappointed public
climate
Fundamental Law (2011)
 passed a full official EU audit - fully complying with EU standards
 declares that the nationalities living beyond Hungary’s border are part of the
Hungarian political community and are constituent parts of the State.
Main elements:
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Determines Hungary’s place within western civilization;
Common values : family, rule of law, home, work and health;
Highlights the importance of protecting families and human life;
HU’s commitment towards the common constitutional values and traditions of
the European Union;
Determines fundamental human rights in the spirit of the EU Charter of
Fundamental Rights;
Economy based on value-creating work;
Balanced, transparent and sustainable budget management;
Unified and efficient ombudsman office.
Structural reforms
Top 50 „unorthodox” economic measures
Lifting of the EDP procedure was a milestone
Croatia
Malta
Denmark
Cyprus
Austria
Belgium
The Netherlands
Portugal
Slovenia
France
Ireland
Greece
Spain
UK
Bulgaria
Finland
Germany
Hungary
Czech Republic
Slovakia
Poland
Italy
Latvia
Lithuania
Romania
2004
2005
2006
2007
2008
2009
2010
2011
2012
Oct
Dec 2015 Febr
2013 Febr
Apr
Oct
June
Aug
Aug
Dec 2014 Febr
Apr
June
Jan
Mar
Mar
May
Jan
Jan
Mar
Jul
Sept
Nov
May
Sept
Nov
Jul
Hungary was able to improve both external and
internal balances substantially
Current account balance
Fiscal balance
Source: Eurostat
Hungary’s Government Debt to GDP Ratio
100.00%
90.00%
80.00%
70.00%
60.00%
50.00%
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Source: Hungarian National Bank (2014)
2012
End of FX Trap
Decreasing households credits
in foreign currency (FX)
200
Decreasing debt-to-GDP ratio over the
forecast horizon with falling share of FX debt
per cent
HUF Bn
100
20
20
10
0
0
New loans in FX
Nov
40
Jun
30
Jan 2010
60
Aug
40
Mar
80
Oct
50
May
100
Dec
60
Jul
120
Feb
70
Sep
140
Apr
80
Nov
160
Jun
90
Jan 2005
180
Growth in Hungary’s Employment is
exceptional in the EU
Changes in employment (%, compared to pre-crisis level)
Innovative Tax Reform
in percentage of total tax revenue
Hungary – Competitive Tax System
Lowest corporate income taxes in EU
European
countries
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
Hungary
Bulgaria
Cyprus
Ireland
*Applied exchange rate: 300 HUF/EUR
Poland
Czech
Republic
Croatia
UK
Corporate income tax
France
33.33%
Spain
30.00%
Germany
29.55%
UK
24.00%
Greece
26.00%
Czech Republic
19.00%
Slovakia
23.00%
Poland
19.00%
Hungary
10-19%
Source: European Commission, KPMG (2014)
Hungary – Labour Force
Liberal labour regulations:
Regulations (hiring / lay off practices, minimum wages etc.) do not hinder
business activities.
Competitiveness rankings (scaling from 1 to 10)
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
Number of days needed to start a business
35
32
30
25
18
20
10
4.13
3.97
3.84
Hungary Bulgaria
Poland
Slovakia
3.5
3.31
1.87
Czech Romania Slovenia
Republic
5
20
14
15
5
18
4
6
0
Hungary Slovenia Romania Bulgaria Slovakia
Czech Poland
Republic
Source: IMD, World Competitiveness Online (2013)
Hungary’s Exports to the EU/US
90%
80%
70%
60%
50%
Hungary's export to the US
Hungary’s export to the EU
40%
30%
20%
10%
0%
1989
2000
2013
2014
Source: Hungarian Central Statistical Office (2014)
Investments: Hungary outperforms
Regional Peers’ and EU28 average
Gross fixed capital formation (total)
Foreign Direct Investment, net inflows
(% of GDP 2014)
in proportion of GDP
10
9
8
7
6
5
4
3
2
1
0
Hungary
Source: Eurostat
Czech
Republic
Slovak
Republic
Slovenia
Romania
Austria
Source: The World Bank databank (2014)
Hungary’s key flow indicators are also improving
Per cent
7
Hungary's key flow indicators (10 year averages t-4,t+5) and the
Issuer Rating
average Credit Rating
A
6
6
5
A- 7
4
3
BBB+
8
2
1
BBB
9
0
-1
-2
BBB10
-3
-4
BB+11
-5
-6
-7
2007
2008
GDP growth
2009
Inflation
2010
2011
Current acount balance
2012
2013
Budget balance
2014
2015
BB 12
Average rating (right scale)
Source: IMF WEO, FM database
GDP Growth Rates in the EU - 2014
5.0%
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
Ireland
Hungary
Slovenia
UK
Luxembourg
Poland
Malta
Source: European Commission (2015)
Hungary: Key Economic Statistics
Economic Indicators
2013
2014
2015 (est.)
GDP growth (annual average)
1.0%
3.6%
3.0 %
Inflation (eop)
1.7%
-0.2%
0.9%
Unemployment (eop)
10.2%
7.1%
6.9%
Budget def. (GDP %)
-2.4%
-2.6%
-2.4%
Trade surplus (GDP%)
6.6%
6.3%
7.9%
Government debt (GDP %) (eop)
77.3%
76.9 %
76.1%
762
785
809
Average wage per month (in euro)
Competitiveness Indicators
Personal Income Tax
16% (flat tax) → 15%
Corporate Income Tax
10% (19%)
Nr. of days to start a company
4
Source: National Bank of Hungary, National Statistics or Ministry for National Economy.
Hungary: More than Expected
added value to GDP
Poland
Luxemburg
Lithuania
Romania
Netherland
Tourism from UK in 2014:
 Tourism makes up 10.3% of GDP in HU.
 UK has become the second largest source
market for Hungary in tourism (after
Germany)
Tourism from UK in 2015 January-July:
 198,560 visitors (+24.3% yoy increase)
 501,942 guest nights (+25.7% yoy increase)
Belgium
Slovakia
Finland
Denmark
Czech Republic
Air-flights connectivity:
 8 direct flights a week to/from Manchester
Latvia
France
Germany
Ireland
Sweden
Italy
Hungary
United Kingdom
0.0%
5.0%
Source: World Travel & Tourism Council –
country reports 2014.
10.0%
15.0%
Main tourism products from the UK
 Budapest – city break destination
 Cultural tourism
 Wine & gastronomy
 Debrecen and the region
 MICE (Meetings, Incentives, Conferences,
Exhibitions)
Agriculture in Hungary
Hungary has one of the best agricultural characteristics in the world:
 Hungarian agricultural sector could supply up to 30,000,000 people.
 Low purchasing prices in Hungary combined with high selling prices in export
markets gives Hungary a relative advantage.
2123
Between 2014-2020
hrs of sunshine annual
average
EU CAP support
12.4 billion €
Europe
densest
hydrography
3%
of the world’s best agri.
production areas
5 300 000
hectares of agricultural
land, sixth in the world in
terms of proportion
Available
humanresources
1000 years
of traditions
Excellent quality
Hungarian products,
continuous research
Manufacturing in Hungary
Automotive Industry
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one of Hungary’s leading industries;
20% of total exports;
Around 700 companies employing over 130,000 ppl;
In 2014, over 2.4 million engines and 400,000 passenger
cars have been manufactured in Hungary;
 The number of TIER1 and TIER2 equipment
manufacturers is continuously rising;
 Suzuki, Audi, Opel, Daimler, Mercedes-Benz.
More than 210 industrial parks
available for manufacturing activity
Greenfield, brownfield investments
Good access to highways
Excellent infrastructure services
Turnkey solutions
New technology and logistical parks
Electronics
Warehousing
 Electronics manufacturing and research are among the
main drivers of innovation and economic growth;
 22% of total Hungarian manufacturing production;
 Six out of the top 10 Electronic Manufacturing Services
(“EMS”) providers in Europe are present in Hungary
(Jabil, Flextronics, Foxconn, Sanmina, Zollner and
Videoton;
 Bosch, Clarion, Electrolux, Flextronics, Foxconn, GE,
JABIL, Philips, Samsung, Siemens, ZTE etc.
Customs arrangements
Forwarding
Administration (authority permits)
Financial services
Legal consulting
Extra services
Shared Services Sector in Hungary
 About 90 existing centres with more than 34,000 employees
 Since 2013 success stories include SSC’s established by GE,
Pactera, Emirates, Systemax, GREIF, Computacenter, and
recent re-investment by British Telecom
 Keys to success:
 Competitive labour costs and good balance of quality: Hungary has the
lowest hourly labor cost in the business services industry in CEE;
 High level of educational system: Hungary ranked 23rd based on the
quality of scientific research according to the World Economic Forum;
 Wide range of language availibility: 91.8% of fresh graduates has
English language skills;
 Excellent office infrastructure and low rental prices.
Hungary – Soft factors – IQ & Stamina
Number of Nobel prizes / One million citizens
Number of Olympic medals / One million citizens
1.4
60
1.2
50
1
40
0.8
30
0.6
0.4
20
0.2
10
0
0
Source: http://www.nobelprize.org/nobel_prizes/lists/all/
Until the present day Hungary gave 13 Nobel prize
winners.
Hungarian inventions contributed immensely to the
evolution of science, technology. Among many
others József Bíró („Biro-pen”), János Neumann
(pioneer of electronic computers) are well known
around the world.
Source: http://hu.wikipedia.org/wiki/
Hungary has traditionally been a very strong
competitor in sports. Both team sports and
individual sports include a very high number of
Hungarian Olympic champions. A name that
rings familiar in every corner of the world:
Ferenc Puskás
What to expect in the future
Economic Indicators
2014
2015 (F)
GDP growth (annual average)
3.6%
3.3%
Inflation (eop)
-0.2%
0.3%
 Sustainable and balanced
economic growth
 Government’s priority on job
creation
Unemployment (eop)
7.1%
6.9%
Budget deficit (GDP %)
2.6%
2.8%
 Business friendly environment
Trade surplus (GDP%)
6.3%
7.9%
 Low taxes on earnings
76.9 %
76.7%
 Policies geared to enhance access
16%
15%
Government debt (GDP %) (eop)
Personal income tax
 Fiscal austerity
to financing
Ambassador of Hungary
Thank you for your attention!
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Website of the Hungarian Government: www.kormany.hu/en
Website of our Embassy: www.london.gov.hu
F Embassy of Hungary
A @AmbSzabadhegy