Doing Business in Hungary

General information

1.1.  Overview

  • abra_1-1.jpgArea: 93 036 sq km
  • Capital: Budapest
  • Official language: Hungarian
  • Currency: Hungarian forint; abbreviations: Ft, HUF; prevailing interest and currency rates
  • Form of government: republic
  • Population: 9 877 365
  • International Airport: Budapest Ferihegy, BUD
  • OECD member since: 1996
  • EU member since: 1 May, 2004.

Hungary - World of Potentials
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1.2.  Geography and climate

Hungary is situated in Central Europe, between latitudes 44° and 48° North and longitudes 16° and 23° E and occupies an area of 93 036 sq km. Neighbouring countries: Slovakia to the north, the Ukraine and Romania to the east, Serbia, Croatia and Slovenia to the south and southwest, and Austria to the west.

The majority of the landscape consists of plains and low mountains. The highest point in the country is the Kékes at 1 014 m. The two largest rivers, the Danube and the Tisza, are navigable. The Balaton, the largest lake in Central Europe, can also be found in Hungary. Natural treasures of the country include the arable land and the waterways, the latter including, in addition to a large number of rivers and lakes, a number of high-quality artesian springs and various types of thermal springs.

Hungary has a continental climate but is also influenced by the oceanic climate from the west and the Mediterranean climate from the south. Summers are generally warm and sunny with temperatures in the 25-30°C range. For a few weeks, daytime temperatures can reach around 35–38°C. Winters are cold with temperatures in the -10–0°C range. Spring and autumn are often short and usually wet.

1.3.  Population

The population of Hungary has been declining steadily since 2001. According to figures of 1 January 2015, the total population of Hungary is 9 849 000. Bringing the population decrease to a halt is a primary government objective. The age pyramid depicts an aging population.

Close to 20 percent of Hungarians live in Budapest and its suburbs. This concentration is mostly due to the capital’s primary role in the country’s higher education, public administration and economy, as well as the traffic infrastructure. In addition to the high concentration in Budapest, the number of people living in large and mid-size towns is also significant, and migration from small towns is typical.

In terms of ethnic composition, the vast majority of the population are Hungarian, but the peoples from neighbouring countries and those that settled in Hungary during previous centuries have strong minority representation. The following is a list of minorities from the most to the least populous Gypsies, Germans, Croats, Slovaks, Romanians, Ukrainians, Serbs and Slovenians. 

1.4.  History

After a centuries-long journey, Hungarian tribes settled in the Carpathian Basin in 9th century A.D. The following century witnessed the development of centralised leadership over the tribes. Pagan Hungarians were converted to Christianity under Stephen I, the first King of Hungary, a process that lasted for several decades. The foundation of the Hungarian state is traced back to the date when Stephen I was crowned with the headpiece received from the Pope of Rome.

Despite the devastation caused by the Mongol invasion, centralised power and a strong state were established in the Middle Ages. The nation-founding House of Árpád was succeeded by the Anjou kings, who raised Hungary to a great European power. In addition to the country’s political and economic roles in Europe, succeeding kings enhanced the importance of Hungary’s cultural life, which resulted in a flourishing state during the Renaissance only to be brought to an end by the Ottoman occupation.

By early Modern Times, Hungary’s political power had decreased, and with the Ottoman invasion its territory was broken up into three parts in 1541. The ensuing battle to recapture the country from the Turks turned the central area of the country into a wasteland. The Habsburgs ruling the western part of the country easily extended their influence over this central region previously occupied by the Turks and the Principality of Transylvania, a former vassal state of the Ottoman Empire in the east. Between the early 18th century and World War I, Hungary was part of the Habsburg Empire.

Hungary eventually regained its independence as a republic after World War I. The Peace Treaty of Trianon, signed on 4th June 1920, redefined state borders, as a result of which the country lost around two thirds of its pre-World War I territory and population. Between the peace treaty and World War II, Hungary was once again officially a kingdom, but was ruled by a governor.

In 1941, Hungary joined Germany in the Second World War with high hopes of regaining the territories it had been deprived of some two decades before. In 1944, the country was occupied by the Germans, who were defeated and replaced as the occupying force by the Soviet Red Army only to increase the material and human toll of the war.

The Paris Peace Treaty reinforced the state borders of the Treaty of Trianon. The post-war period of parliamentary democracy, lasting barely four years, ended in August of 1949 with the Soviet-backed Communist Party taking over control of the country and establishing a one-party system. In the first half of the 1950s, Hungary was changed into a Stalinist totalitarian regime against which the 1956 Revolution broke out under the leadership of workers and young people. After the revolution was defeated by the communists relying on the support of Soviet tanks, government control tightened, yet this proved to be relatively mild (“goulash communism”) compared to other countries in the Soviet-led communist bloc.

In the late 1980s, Soviet control began to slacken, paving the way for the change of political regime in 1989, with 23 October marking the birth of the new Republic of Hungary. The first democratic national and municipal elections took place in 1990. Complete democratic restructuring and stabilisation of the new institutional system went in parallel with a fundamental transformation of economic life.

As early as 1990, Hungary was striving for Euro–Atlantic integration, joining NATO in 1999, the European Union on 1 May 2004, and the Schengen Area in December 2007. 

1.5.  Political and legal environment

Since 1990, the Republic of Hungary has been based on a political system of Parliamentary democracy. Parliament is the highest body of popular representation. Members of Parliament are elected directly by the people every four years. Upon the recommendation of the President of the Republic, the Parliament elects the Prime Minister, who then forms the cabinet. Cabinet members are appointed by the President upon the recommendation of the Prime Minister. The President of the Republic is elected by Parliament for a period of 5 years.

The President’s duties are primarily diplomatic, but he also announces the date of a national election and his approval is necessary for bills passed by Parliament to be enacted.

The 15-member Supreme Court is an independent forum designated to study whether or not specific laws are in compliance with the constitution. Enacted in 1949 and amended in 1989 on the occasion of the democratic transformation, the constitution was replaced on 1 January 2012 with a new constitution, which reflects the European and the general international principles.

Hungary is divided into 19 counties and the capital representing a separate region for public administration purposes, and 7 regions for development and statistical purposes.

1.6.  Education and culture

The Hungarian education system is divided into three levels (elementary, secondary and higher education),all three with some publicly owned and some privately owned institutions. Hungary joined the Bologna Process in 1999.

1.7.  Economic information

The sectoral structure of the Hungarian economy is mostly compatible with other countries at the same level of development.

The service sector accounts for slightly less than two-thirds of the GDP. Within the service sector, the private services (trade, tourism, finance and other economic services) are highly developed. Services, especially economic services, represent a sizeable portion of the country’s export. The transportation sector (with some companies owned by the state and others by private corporations) offers optimum conditions for transit traffic due to Hungary’s favourable geographical location. The state-run service sectors (health, education, public administration) failed to keep pace with the other service sectors and their fundamental transformation is therefore high on the political agenda.

The agricultural sector, for which Hungary has especially favourable climate conditions, represents approximately 4 percent of the country’s GDP. In line with international trends, the industrial sector accounts for around one quarter of the country’s GDP. Recently, primarily export-focused industries have been able to increase their output. These include the automotive industry, telecommunications and computer technology, while food and light industries have fallen back and the construction industry, as a result of the crisis, remains in a poor condition. The shortfall in the food industry is mostly attributed to the adverse conditions generated by Hungary’s accession to the European Union. However strong it may once have been, Hungary's light industry is now almost non-existent, as Hungary has also lost out to Southeast Asian export markets.

1.8.  Current economic situation

Global economic growth may accelerate to 3.7 percent in 2016. The main driver of the global economy will continue to be the United States, experiencing a growth of 2.7 percent in a healthy structure. In addition to favourable unemployment and growth figures, the Fed will begin to raise its policy rate from the beginning of 2016 at the latest, which will create new conditions in the global money and capital markets and may also influence the economic processes of the eurozone. Although imbalances (balance of payments, general government) are receding in Europe, the financial sector is slow to stabilise and monetary policy is becoming more accommodative, the US rate hike may siphon funds away from the eurozone, thus hindering growth momentum. The Greek crisis has recently abated, however, the tension remains. The economic policies of the re-elected Siriza administration are unknown for the time being, however, an attempt at renegotiating the loan agreement can not be outruled. 

The migration crisis is a great new source of tension in Europe whose political, economic and social implications are impossible to foretell today. From a purely economic perspective, immigration may support growth in the long run, however, it entails a number of short term risks. The economic impact of the Volkswagen scandal due to the misrepresentation of the emissions of their cars is also impossible to predict. Despite all the aforementioned risks on the downside, we expect to see some acceleration of economic growth in Europe. The European Union may grow by 1.9 percent while the eurozone and our key economic partner, Germany by 1.7 percent. We still do not see any major inflation risks although oil prices may rise by almost 10 percent to USD 65-66 a barrel. 

The difficulties of emerging markets, for years the main drivers of growth, are expected to prevail in 2016. Tensions have already made their presence felt in the deceleration of growth which is further enhanced by the US rate hike. The combination of balance of payment difficulties, money market turbulences, economic policy mistakes and the unavoidable model shift make growth even more fragile than earlier, nevertheless, we expect to see a slight acceleration in the EU as a whole.

GDP growth

Contrary to the acceleration of the global and European economy, GDP growth will continue to decelerate in Hungary in 2016. The reason is that the effects of the favourable economic situation abroad can not outperform the loss of growth due to the decline in investments. Household consumption continues to rise, however, not as fast as in the previous years. The real income of households decreases due to the outflow of income adjusted to the underestimated inflation rate and the nominal cuts in social spending, however, the additional disposable income resulting from "holding the banks to account" improves their consumption power. There are some downside risks to our forecast of 2.4 percent annual GDP growth: A halt to external economic growth, the greater than expected restrictions on the utilisation of EU funding and the currently unpredictable effect of the Volkswagen scandal on the Hungarian motor industry and export performance may all hold back growth. 

Drivers of growth

Investments 

The sources of funds available in the 2007-2013 EU programming cycle will be closed in 2016 and grants under the new programming period are not yet fully available. According to the budget for 2016, within the consolidated expenditures of general government, accumulation expenditures will drop by 23 percent, of which investments by 14 percent, compared to the 2015 appropriations. Although the NBH's Credit for Growth program is expected to continue and the borrowing ability of companies will improve, the still unpredictable government policies prevent the companies from assuming long-term commitments. At the same time, large export-oriented companies (primarily in the motor and ancillary industries and pharmaceuticals) are riding the wave of external growth and are planning to expand their capacities, therefore, investments are not expected to decline by more than 2 percent in 2016. With next year's decline, the trend of capital stock accumulation that has been on the rise since 2013 will reverse and the level of investments will once again drop below the pre-crisis levels. 

Incomes 

As the personal income tax rate was reduced to 15 percent in 2016, this in itself adds 1.5 percent to the real value of incomes, i.e. the increase of net incomes is expected to exceed the gross increase by that rate. In the private sector, we expect a more moderate growth in real income than in 2015 due to sluggish GDP growth, however, due to the higher inflation rate annual savings may rise to HUF 2 500 billion, or 7.5 percent of the GDP from 5.9 percent in the previous year. 

In the first half of the year corporate credit decreased by HUF 500 billion despite the fact that the NBH prolonged the Credit for Growth program and the market outlook also improved. The drop was probably partly due to the cheaper financing available through the parent companies. However, as market lending stopped almost completely, we expect the overall amount of corporate credit to decline even further during 2016. Accordingly, the corporate sector will be a net saver also in 2016 (by approximately HUF 400 billion),thus it will not contribute to the dynamisation of the economy.

The effects of "holding the banks to account" and the conversion of FX loans to HUF will abate in 2016, however, the reduction of the PIT rate may boost household savings. At the same time, increasingly negative forward real interest rates are pushing savings into real investments (property, works of art, gold). The financial savings of households will be around HUF 1 800 billion. At the same time, the improvement of the creditworthiness of households may boost borrowing, which is no longer counter-balanced by the forgiveness of loans. As a result of the above, net household savings may drop to HUF 1 700 billion, or 4.9 percent of the GDP. 

No similar rupture is expected in the corporate sector as we still do not expect to see a return to the net borrower position which would be "normal" for its operations. The NBH originally intended to phase out the Credit for Growth program, however, as market lending is not expected to pick up next year either, we are likely to see an extension of the program. Nevertheless, loan repayments are expected to exceed new borrowings also in 2016 as a result of which the net savings position (hindering economic growth) will continue to prevail in the sector

Foreign trade

In 2016, export and import growth expressed in EUR are expected to decelerate slightly, the former may reach 6 percent, while the latter 4.7 percent. The surplus of the foreign trade balance continues to grow due to the export bias and it is expected to exceed EUR 9.2 billion. The concentration of our export remains very high and the output of our export sector primarily based on the car industry may be seriously affected by the crisis of the German car industry. This is the main downside risk in our foreign trade forecast.

Current account balance

In 2016, due to the good export opportunities, the export surplus may grow further alongside the increase in imports: the balance of real economy transactions may rise to EUR 9 billion. Although EU transfers will be lower than in the previous years, the lower interest expenditures resulting from reduced debt levels are expected to mitigate the deficit of the balance of income. As a result of the above the current account surplus may reach HUF 4.8 billion, or 4.3 percent of the GDP. However, due to the temporary decline in EU transfers, the capital account is expected to be significantly lower than this year, yet the country's external financing capacity will remain high and may reach EUR 8.4 billion, or 7.5 percent of the GDP. 

General government balance 

Keeping the budget deficit below 3 percent of the GDP and reducing the debt ratio are not expected to pose a difficulty either this year or in 2016. However, further action will be required to reach the deficit and public debt targets envisaged in the convergence program that is also necessary in order to meet the EU requirements. The durability of budget consolidation could be best ensured by improving the growth potential. Additional expenditures resulting from the unexpected events of the international environment (actions of large central banks, migration) may give rise to downside risks. However, sound budgetary management (saving the National Protection reserves and moderate spending) may take us closer to achieving the deficit and debt targets, in particular if the plans for asset sales are implemented and the EU procedures are concluded in our favour. 

The 2016 budget deficit may reach 2.4 percent of the GDP under ESA 2010 standards, as opposed to the 2 percent provided in the Budget Act. One of the reasons for the deviation is that we have been unable to take asset-related revenues into account due to the absence of detailed plans. Another reason is that we predict more moderate growth, as a result of which less revenues will be generated from sales taxes and payments by households than foreseen. We expect EU fund drawdown to be less than planned, which improves the forecast due to the saving of own contributions. We further assume that the National Protection fund will not be used. Our forecast involves both upside and downside risks. The realisation of asset-related revenues could improve the budget position compared to our forecast, while the resolution of disputes with the EU may both increase or decrease the deficit. 

State debt 

If our forecast is accurate, the debt ratio may drop to 75.3 percent by the end of 2016. The decrease in the debt ratio predicted by us is lower than the government forecast because we foresee slightly less growth, greater deficit and weaker exchange rate. 

Development of consumer prices 

Imported inflation will slightly increase in 2016 due to the external price increases (including oil). However, as opposed to the government's spendthrift policies (wage increases, increased family tax credit, reduced personal income tax rate, broadened public works program),significant constraints are expected in the social sector, both nominally and through the valorisation of income to the underestimated inflation. The income of households from "holding banks to account" will contribute to demand. The gross wage bill will also rise due to increased employment in the private sector. In the light of the foregoing, our average inflation estimate for 2016 is 2.4 percent while our prediction for the interim inflation rate is 2.9 percent. We also forecast a rise in baseline inflation. 

Development of interest rates 

An interest rate hike will be probably unavoidable in the second half of 2016, party due to higher inflation and party to the interest premium that will shrink as a result of the higher USD interest rates. The pressure may be somewhat eased by the continuously decreasing external vulnerability of the Hungarian economy, which allows international credit rating agencies to reclassify Hungary into the investment grade category. We expect the policy rate to rise to no more than 2 percent by the end of the year. The central bank rate movement will impact money market yields, although the nature thereof is uncertain due to the changes in the monetary policy toolset. 

In 2016, costs integrated into bank interest charges will be decreased due to the halving of the bank levy as a result of an agreement between the government of Hungary and EBRD. The positive impact of the above on loan rates will be counterbalanced by the increased amount of contributions to be paid by banks to the deposit and investor protection funds due to the fall of some savings cooperatives, the Buda-Cash brokerage company and the related DRB bank group and, in particular, the generous compensation paid to the victims of the Quaestor fraud. Accordingly, we expect to see wider interest spreads and an increase in loan rates next year. 

Exchange rate development 

In 2016, the rates of the main global currencies are influenced by diverging policies. The Fed is expected to begin hiking rates at the turn of 2015-2016, while the ECB will maintain its easy monetary policy to avoid deflation and to stimulate economic growth. As a result, the euro, currently strongly undervalued in real terms, may recover somewhat and the EUR/USD rate may reach 1.14 by the end of the year. Owing to Fed's rate hikes, the HUF interest premium will gradually disappear against the US dollar during 2016, which may weaken the Hungarian currency due to sluggish investor appetite. This process may be curbed to some extent by the reclassification of the country into investment grade category and may even be halted if the NBH launches its own hiking cycle, forecasted for the second half of 2016. Subject to the above conditions, the HUF may somewhat recover: we predict HUF 312 to the EUR and HUF 274 to the USD by the end of the year. 

OUTPUT OF MAIN SECTORS 

Industry 

The growth rate of our key foreign trade partners will only increase by a few tenths of a percentage point in 2016. Thus, export growth will slightly decelerate (primarily due to the high base) while domestic sales may maintain their 2015 pace due to the unchanged level of imports and the increase in household consumption. Accordingly, we expect an industrial growth rate of 6 to 7 percent (similarly to this year),which may be reduced by the potential decline in the production of Audi engines (a key player in the Hungarian vehicle industry) due to the Volkswagen scandal. 

Construction

We also do not expect the growth rate of the Hungarian construction industry to accelerate in 2016, as the distribution of the funds from the new EU programming period will not switch into high gear yet. The private sector does not offer a boost to construction, and only residential construction may recover somewhat, as exemplified by the almost 40 percent increase in building permits. Based on the foregoing, we predict a 3-4 percent increase in construction for 2016.

Agriculture

Owing to the completed and pending investment projects co-funded by the EU, agricultural output is expected to grow in 2016. The production and purchasing of plants may increase by 2-3 percent, of livestock by 1-2 percent and of milk by 4-5 percent. The slight shrinkage of the poultry sector will be partly counterbalanced by the expected growth of the pig sector owing to the completion of various construction projects. Accordingly, total agricultural output will be 2-3 percent higher while agricultural income will be 3-4 percent higher than in 2015.

SUMMARY AND CONCLUSIONS

Contrary to the acceleration of global and European growth, Hungary's economy is expected to slow further in 2016: our best case scenario is 2.4 percent GDP growth. This dynamic, already lagging behind the surrounding countries, may further deteriorate due to the effects of the Volkswagen scandal given the high significance of car manufacturing in Hungarian industry and exports. Investments are already sluggish this year and they will markedly contract next year due to the temporary decline in EU funding and the lack of investor confidence; their volume will drop to pre-crisis levels, which will further deteriorate the country's competitive position and chances of convergence. The export surplus will dynamically grow due to former investments (mainly in the car industry),thus the country's robust external financing surplus may remain in place despite lower EU transfers. Household consumption will continue to grow, however, the outflow of income indexed to the underestimated inflation and the nominal decrease in social benefits will shrink real incomes despite the lower personal income tax rate, thus, only the carry-over effects of "holding the banks to account" will increase household spending. Due to the deceleration of growth, fewer new jobs are created in the private sector, thus any further decrease in unemployment is only made possible by the expansion of public employment. Decline in budget deficit and public debt, reduced vulnerability due to the conversion of FX loans to HUF and robust surplus in the external position increase the probability of Hungary being upgraded from the non-investment-grade category. 

Economic growth and equilibrium, indicative of the recovery from the crisis, have been improving for two years party due to external growth and EU funding, and partly consumption-boosting fiscal and monetary policies. However, the extensive and state controlled nature of this growth is a serious obstacle to the sustainability of the momentum required for convergence. Due to low productivity, increased employment levels (mainly due to public works) play a key role in GDP growth, whose further expansion is limited by scarce budgetary resources as well as the quantity (migration) and quality (centralised and "watered down" education) of the available labour force. Private sector investments are mainly related to EU funding and the special deals (strategic cooperation agreements) entered into with the government, while the private sector's ability to raise and maintain capital has been deteriorating for years. State ownership has been on the rise not only in the public utilities but also in the private sector, which, combined with the extensive restriction of competition, makes the improvement of the efficiency of the Hungarian economy doubtful. Growth in public employment can only temporarily improve the overall employment landscape as the majority of public workers will never make it to the labour market.

The government is primarily trying to consolidate the economy by means of measures that undermine future growth (imposing levies on the revenues of service sectors and withdrawing funds from the social sector, education and health care) and methods offering only temporary solutions (public employment, public utility cuts),which deteriorate the potential growth rate of the economy. The above actions make it difficult to maintain a growth trajectory that could support convergence, while it requires ever increasing sacrifices from Hungarian society.

Summary forecast figures

(previous year=100%)

Description2013*2014*2015*2016
World economy
GDP production103.4103.4103.3103.7
  Of which - Euro zone99.6100.8101.5101.7
                - Germany100.2101.6101.6101.7
Inflation in developed countries (%)1.41.40.21.2
Goods and services in world trade103.3103.2104.1104.4
Hungarian economy
GDP production101.5103.6102.9102.4
Gross fixed capital formation105.2101.7104.2

99.0

Household consumption100.2101.5102.7

102.2

Investments106.9115.8103.0

98.1

Net household savings5.25.97.5

4.9

Net savings of companies3.00.41.2

0.7

Real income103.1103.2103.3

101.6

Number of employees, as per

workforce survey, annual average

(thousand persons)

3 892.84 101.84 200

4 250

Unemployment rate, annual average10.27.77.0

6.2

Export (at current prices, EUR)101.7104.0107.5

106.0

Import (at current prices, EUR)102.0104.7106.1

104.7

Balance of foreign trade, EUR million6 5556 2747 683

9 225

Current account balance, EUR million4 0372 3564 400

4 800

External financingcapacity as

percentage of GDP

7.66.17.6

7.5

State budget deficit as percentage 

of GDP (ESA '95)

-2.4-1.9-2.9

-2.4

State debt as percentage of GDP

77.376.976.1

75.3

Inflation, annual average (%)

1.7-0.20.2

2.4

Inflation, year-end (%)

0.4-0.92.0

2.9

Prevailing national bank interest

rate, end-of-year (%)

3.002.101.35

2.00

yeild of 3-month state bonds,

end-of-year (%)

2.91.41.21.9
HUF/EUR exchange rate, end-of-year296.9315313312
HUF/USD exchange rate, end-of-year215.7259285274
Industrial production101.1107.7106.5106.5
Contruction108.5116.9105.5103.5
Agricultural production113.1109.695.5102.5
Nominal GDP, billion HUF29 84631 86433 26634 796

*forecast by Pénzügykutató Zrt.

Source: penzugykutato.hu

1.9.  The stock market: the Budapest Stock Exchange

The Budapest Stock Exchange (BSE) is the venue for trading with shares of public companies limited by shares and registered in Hungary, securities issued by businesses, and Hungarian state and other securities. The BSE has four trading sections: equities, securities, derivatives and commodities. For more information on the BSE and BUX, its leading index, see the BSE website:

http://www.bse.hu/topmenu/marketsandproducts/indices/bux

The Budapest Stock Exchange is a full-fledged member of a number of international professional alliances and organisations:

1.10.  Visas, work and residence permits

The visa regulations of the Republic of Hungary are in compliance with the regulations and recommendations of the European Union and the Schengen Agreement. Hungary joined the Schengen area in December 2007.

Regarding Hungary’s Schengen membership, the following need to be highlighted: 

  • visas and residence permits issued by any member state of the Schengen area are valid in the Republic of Hungary, and vice versa
  • visas issued by Hungarian legations abroad, and residence permits granted by Hungarian national authorities, are valid for the Schengen area as specified on the stamp of the visa issued in the member states: “ETATES SCHENGEN”, i.e. valid for all Schengen States.

The Schengen visa and entry regulations apply only for stays that do not exceed 90 days. For periods longer than 90 days, the visa regulations of the respective member states apply.

For more detailed information regarding entry and residence permits and the relevant procedures, a list of countries whose citizens can travel to Hungary without a visa, and special regulations on the citizens of non-EU countries, please visit the website of the Ministry of Foreign Affairs.

1.11.  Other useful information

Hungary uses the metric system for units of measurements.

Hungarian date notation: year/month/day. Contrary to the Hungarian spelling rules, as from 1 January 2012, the food trade shall display the shelf-life of the products in the order of day/month/year in compliance with the regulations of the European Union.

Hungarian uses the comma as the decimal separator and the full stop as the thousand separator.

Time Zone

Hungary is in the Central European Time Zone (CET),which is one hour ahead of Greenwich Mean Time (GMT). The country uses the practice of daylight saving time, advancing clocks by one hour during the period from the last weekend in March to the last weekend of October.

Normal business hours:

  • Private and public offices: 8 a.m. to 4 p.m., closed on Saturdays and Sundays
  • Retail: 10 a.m. to 6 p.m. Monday to Friday, 9 a.m. to 1 p.m. on Saturdays
  • Shopping centres, hypermarkets: 7 a.m. to 9 p.m., seven days a week 
  • Restaurants: 12 noon to 10 p.m.

The information above is not exhaustive and should only be considered as a guide because business hours may differ significantly in specific cases.

Public holidays in 2016:

  • 1 January New Year’s Day 
  • 15 March National holiday
  • 27-28 March Easter 
  • 1 May Labour Day
  • 16 May Pentecost
  • 20 August Commemoration of the founding of the Hungarian state
  • 23 October Commemoration of the Revolution of 1956 
  • 1 November All Saints’ Day
  • 24 December Christmas-Eve
  • 25-26 December Christmas day and Boxing day

Weekday rest days and Saturday working days in 2016:

  • 1 January (Friday) rest day
  • 5 March (Saturday) working day
  • 14 March (Monday) rest day
  • 15 October (Saturday) working day
  • 31 October (Monday) rest day

Distances between Budapest and some major European cities: 

  • Vienna, Austria: 243 km
  • Frankfurt am Main, Germany: 964 km
  • Rome, Italy: 1 225 km
  • Paris, France: 1 448 km
  • Prague, Czech Republic: 525 km
  • Warsaw, Poland: 741 km
  • Bucharest, Romania: 821 km
  • Kiev, Ukraine: 1 107 km
  • Amsterdam, Holland: 1 395 km
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