The Hungarian economy grew 3.6% last year, based on a broad foundation. According to the ambitious Minister of Foreign (Business) Affairs, Péter Szíjjártó, the policy of Eastern opening surely contributed to the success, which has propelled Hungary into the European top field.
Correcting the first estimate of 3.5%, the Central Statistical Office (KSH) then reported 3.6% growth for 2014 – based on a broader circle of base data and a higher evaluation of agricultural performance. According to KSH, the value added by the agriculture sector grew an impressive 12%, which is twice as much as the construction industry, supported by EU funds, could achieve.
Based on the industrial dynamics, the manufacturing sector finished close behind the construction sector, however its contribution to Gross Domestic Product (GDP) remains fundamental. In terms of industrial branches, the automotive industry’s prominent role was highlighted again. The Mercedes-Benz plant in Kecskemét and Audi factory in Győr have been working at full capacity since the second and third quarter of 2014 respectively. The number of cars exported grew by one third last year. The net exports decreased EUR 6.4 billion, just a little bit less than in 2013.
However, the automotive exports are usually not oriented towards the East but rather in the direction of Germany and America. The better the flagship of the Hungarian economy is doing, the less importance the Eastern opening will have on economic growth, despite Minister for Foreign Affairs and Trade Péter Szíjjártó not missing highlighting its success.
He is so committed that he would like to promote the “Southern opening” from the middle of the year, with highlights such as opening new commercial houses to enhance exports to Angola, Kenya, Ethiopia, Chile, Peru and Ecuador.
More engines than medicine
Maybe this can be considered as an escape straight ahead, since the exports to Russia and Ukraine, which decreased by two digits (due to geopolitical reasons of course), were among the most important Eastern markets. In the meantime, exports to Germany grew 15% in 2014, mostly explained by the automotive industry.
Besides the agricultural exporters the pharmaceutical industry is also among the biggest losers of the eastern Ukrainian conflict. The famous Hungarian pharmaceutical industry exported medicines for less money than the value of engines made in Hungary sold abroad in 2013.
The ratio of the European Union among the Hungarian export destinations, which has always been dominant, managed to grow further to 78% in 2014, while the ratio of Asian destinations decreased by a complete percentage point within two years, amounting to less than 5.5%. Exports into the USA became livelier, with Mercedes-Benz CLA from Kecskemét throwing its shadow over Richter Gedeon’s anti-depressive called Cariprazine.
Low base helps to achieve success
Concerning 2015 however, the young foreign affairs minister may hope that statistics will provide somewhat friendlier numbers for him. On one hand, the automotive industry won’t be able to keep up the high dynamics; this year will rather be about pharmaceuticals and chemistry. On the other hand, a strong decrease of the export surplus is expected.
The reason for this besides the growing consumption of the population is the growing investment in machinery. The contribution of net exports to GDP will be less spectacular. This will make it easier to promote the extreme successes on the export markets, which have started from a very low base value.