According to Hungarian Tourism authority Japan still remains Hungary’s largest Asian markets with 77,500 arrivals in 2012. Japanese travellers discovered the country in the eighties as Japanese tour operators started to organize circuits along the former capitals of the old Austrian-Hungarian monarchy with the main highlight being first Vienna and Budapest and then Prague, after the collapse of communism in the late eighties.Japan continues to grow strongly, with total arrivals up by over 11%. “However, the fastest growing market has been China. The market enjoyed last year a tremendous growth of 24.3% to over 72,000 arrivals”, tells Kristof Sztojanovits, Director for Germany of the Hungarian National Tourist Office. With annual growth rates of 20% per year, China is likely to take over Japan as Asia’s largest inbound market to Hungary in 2013, overtaking Japan. Another rapid growing market is also Korea, up by 19.6% last year. The tourism authority has currently three representative offices in Asia, in Tokyo, Shanghai and Singapore. The three offices are covering the entire region.
According to Kristof Sztojanovits, Budapest is of course Hungary’s main selling destination for Asians. “Budapest is turning increasingly into a trendy destination. With its bars, clubs and galleries in abandoned houses, it is turning into one of Europe’s most exciting cities for young generations”, he explains. The tourism authority is also increasingly focusing on new source markets from developing countries.
Hungary has made the transition from a centrally planned to a market economy, with a per capita income nearly two-thirds that of the EU-27 average. The private sector accounts for more than 80% of GDP. Foreign ownership of and investment in Hungarian firms are widespread, with cumulative foreign direct investment worth more than $70 billion. In late 2008, Hungary’s impending inability to service its short-term debt – brought on by the global financial crisis – led Budapest to obtain an IMF/EU/World Bank-arranged financial assistance package worth over $25 billion.
The global economic downturn, declining exports, and low domestic consumption and fixed asset accumulation, dampened by government austerity measures, resulted in an economic contraction of 6.8% in 2009. In 2010 the new government implemented a number of changes including cutting business and personal income taxes, but imposed “crisis taxes” on financial institutions, energy and telecom companies, and retailers. The IMF/EU bail-out program lapsed at the end of the year and was replaced by Post Program Monitoring and Article IV Consultations on overall economic and fiscal processes.
The economy began to recover in 2010 with a big boost from exports, especially to Germany, and achieved growth of approximately 1.7% in 2011. At the end of 2011 the government turned to the IMF and the EU to obtain financial backstop to support its efforts to refinance foreign currency debt and bond obligations in 2012 and beyond, but Budpest’s rejection of EU and IMF economic policy recommendations led to a breakdown in talks with the lenders in late 2012.
Since joining the EU in 2004, Hungary has been subject to the European Commission’s Excessive Deficit Procedure; Brussels has requested that the government outline measures to sustainably reduce the budget deficit to under 3% of GDP. Ongoing economic weakness in Western Europe as well as lack of domestic investment and demand caused a GDP to fall 1.7% in 2012. Unemployment remained high, at more than 10.6%.
By: Jeff Frisch
New York News