Szijjarto: Hungary economic outlook positive despite poor European environment

Addressing a forum of the of the US-Hungary Business Council (USHBC), Peter Szijjarto noted that American companies make up the second largest investor community in Hungary, with 1,700 businesses employing 105,000-110,000 people.

This is especially important nowadays, “with the global economy having upturned twice in the past few years, most recently because of the outbreak of the war in Ukraine”, a foreign ministry statement quoted Szijjarto as saying.

The minister said intense debates had evolved in recent years over whether the government should change its economic strategy aimed at creating a labour-based society. Some, he said, had argued that the government should spend its resources on welfare payments for the jobless, but the government had instead focused on preventing unemployment.

It is because of this strategy that the government’s investment promotion scheme made 2022 “the most successful year in Hungary’s economic history”, leading to record investments, employment and exports, Szijjarto said.

Turning to the energy crisis, the minister noted the government’s factory-saving scheme aimed at reducing the energy dependence of companies. It is partly thanks to this programme, he said, that exports increased by 10 percent in the first eight months of the year, that new investments created 50 percent more jobs than last year and that last year’s record investments worth 6.5 billion euros were expected to double this year.

He said Europe’s competitiveness had nosedived in the recent period, and its growth model had “collapsed” because Western technologies were tied to relatively cheap Eastern energy sources, but these had gradually severed due to the war in Ukraine.

He called it “problematic” that natural gas prices in Europe today are six times as high as in the United States, while electricity costs three times as much as in China.

Szijjarto called for reasonable energy cooperation to be maintained with Russia. “There’s currently no alternative to this from Hungary’s perspective,” he said.

The minister hailed the fact that Hungary has become a key meeting point for Eastern and Western investors, particularly in the automotive sector, which he said represented the backbone of the Hungarian economy. This industry, however, faces major challenges, given that Western carmakers have made the decision to transition to electric vehicles while becoming “completely dependent” on Eastern batteries, Szijjarto said.

“Whether we like it or not, the world’s ten biggest electric battery makers are Eastern companies with a combined 98 percent market share,” he said.

Szijjarto noted that all three premium German car manufacturers have set up plants in Hungary and have based key elements of their electromobility strategy here. Also, five of the world’s top ten battery manufacturers will soon be present in Hungary, making the country the world’s fourth-biggest, and soon the second-biggest battery maker, he added. He said this strategy was Hungary’s guarantee for long-term growth.

The future of the European economy depends mainly on the success of the auto industry’s electric transition, “and this transition is happening in Hungary”, he said.