Hungary`s developement weakens economy

developments in Hungary weaken economy

    Everyone who might have read the news over the last week will have come across many negative articles on recent developments in Hungary and on Hungary’s Prime Minister Victor Orban.

Then at the same time when searching online I still find many positive quotes on Hungary and its economy as well as on Hungary as an industrial location.

 “With their stable, democratic government, developed infrastructure, and highly skilled and motivated workforce, Hungary is an ideal country for software outsourcing.”


    Even though this quote is not very old Hungary’s situation has changed completely.


   Shortly after Hungary joined the European Union in May 2004 their economy started to weaken. When in May 2010 Prime Minister Victor Orban was elected the nation’s economy already was in very bad condition (many argue that this has helped him to win the election). Since then many things have changed. Freedom of media has been restricted and the constitutional amendments are now changed for the 4.time in one year.  Nowadays, the country has to face high public debt and a growing corruption. This definitely is a huge step back in the process of democratization.

“Constitutional Revenge”

    In a recent article “Constitutional Revenge”, puplished in the New York Times, Paul Krugman argues that even though the situation in Hungary seemed really difficult to interpret to the European Union now the relation seemed to have calmed down, the U.S, however, still shows some concern. Moreover, Krugman seems to perceive the recent constitutional change as revenge of the government, as for example many fundamental rights (Which should normally exist in a democracy) were abolished. One of the most shocking new laws: criminalization of homelessness. Also, the author points out Europe’s helplessness. Krugman concludes by stating that he expects Victor Orban to increase his power and he warns of the future:

“Prime Minister Viktor Orbán recognizes no limits on his power. When Europe tells him no and when his country’s own Constitutional Court hands him defeats, he waits until Hungary is out of the spotlight, and then he adjusts the constitution to make all those unpleasant restrictions go away.”

    Check out his interesting article!

To conclude, even though Hungary has a very good infrastructure and many well educated people, Hungary is getting less and less interesting for any kind of companies or investors because of the unpredictable political future and therefore the unpredictability of Hungary’s stability.

How do you think is Hungary going to develop? Would you like to invest there and why?

Next week: German companies react to current changes in Eastern Europe.


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