Hungary’s high-quality infrastructure and central location make it an attractive destination for investment. Despite the challenges listed above, Hungary remains an attractive market for U.S. investment and exports. Top reasons for doing business in Hungary include:
- Central location considered to be the gateway to Central/Southeast Europe.
- Well-educated and trained workforce.
- Emerging Tier 2 cities with strong education/university background
- Excellent infrastructure.
- Supply chain opportunities in manufacturing, automotive and electronics industries.
- Government emphasis on innovation and knowledge-based technologies with the slogan of “Invent in Hungary.”
EU funding through 2021 has driven Hungarian growth as it has been used for more than 60,000 projects to improve telecommunications, energy, and highway infrastructure. As part of the National Development Plan (2014-2020), Hungary allocated approximately USD 33 billion to projects ranging from tourism and infrastructure development to healthcare and environment protection. If Hungary receives the frozen EU funds, it may be given USD 61.1 billion (EUR 52.8 billion) from the central budget in the 2021-2027 EU budget cycle focusing on increasing Hungary’s competitiveness in both economic and social terms. The government budget has six main objectives: to enhance the productivity and innovation capacity of Hungarian SMEs to become key players in international economic competition; to increase employment rates and improve productivity and employment conditions; to invest in infrastructure which contributes in particular to enhancing competitiveness; to increase cross-border cooperation with neighboring regions; to give research, development and innovation a central role; and to facilitate the widespread use of renewable energy and encourage the transition to a greener, low-carbon industry, leading to a circular economy to fight climate change. The Construction and Transport Ministry will submit a ten-year railway development program to the government with the aim to upgrade the aging track network and the rolling stock. This requires investment worth up to EUR 15.4 bn which could be covered by EU Funds. Even though the number of passengers dropped significantly during the pandemic, the demand for public transport increased considerably in 2023.
The government prioritizes keeping energy prices low for consumers. It has resisted diversifying its energy supply away from Russia, although it has taken steps to transform the energy sector to become climate friendly and stimulate innovation opportunities. Hungary has achieved remarkable growth in solar photovoltaic (PV). By using solar and nuclear energy together, by 2030, 90% of Hungary’s electricity production is expected to be carbon-free. By 2040, Hungary’s electricity imports are expected to fall from the current average of over 30% to below 20%. The country’s total solar power capacity rose beyond 5,200MW with an increase of 1,187MW in 2023. The total capacity of industrial solar parks has reached 3,124MW and that of home solar panels with capacity of less than 50 kilowatts stands at 2,080MW (source: Mavir). The number of households producing solar energy is more than 231,000, exceeding the 200,000-household target set for 2030, and accounts for 70% of solar energy production. The Energy Ministry also announced feed-in tariffs from 2024, when the moratorium on solar panel feed-in is expected to be lifted.
In 2021, nuclear energy accounted for almost half of electricity generation in Hungary, followed by strong contributions from natural gas (28%), coal (11%), and solar (5%). Among IEA countries, Hungary has the third-highest share of nuclear, after France and the Slovak Republic. Thanks to the recently completed lifetime extension of the existing units at the Paks NPP beyond the initial 30 years for another approximately 20 years (to between 2032 and 2037), nuclear power can maintain its role in the mix. The Paks II project for two additional nuclear reactor units at the Paks site, relying on Russian investment and construction, has faced significant delays. Hungary needs to increase its efforts to avoid an increase in power sector emissions after 2030 and ensure reliable dispatchable capacity. Hungary aims to reduce greenhouse gas emissions by at least 40% by 2030 compared to 1990 levels. Hungary has committed to increasing the current 14% share of renewable energy to at least 21% by 2030. Green transportation is key to achieving these climate goals. Hungary is at the forefront of developing electric mobility in the region, with 2,147 charging stations nationwide (with 4,434 charging units) and more than 80,000 green license plates on the roads by 2023. The Government will allocate HUF 60 billion (USD 85 million) to support companies’ purchases of electric cars and an equal amount to the expansion of charging networks in the coming years. The funds will come from the EU and the domestic budget. Zala Zone, located in south-west Hungary, is a public-private partnership and is a proving ground for classic vehicle tests and connected and autonomous mobility solutions. The project was completed in 2021 in collaboration with Austria and Slovenia. A Zala Drone section was added to the facility 2021.