Bloomberg indicates troubled times in Hungary due to
- the global economic recession and the lack of reform from communism over the past two decades.
- Hungary's main trading partner is the European Union which is in recession.
- Veritas has cut shops
- Audi has closed its plant
- Rising unemployment, with predicitions of a rise to 8-10% unemployment
- Violent protests due to an unpopular president
- Bloomberg has indicated that analysts put the economic decline at about 2% next year.
- the IMF helped thwart a major default by the country by bailing the country out
- inflexible labor market and tax structure
- Opportunities may arise for Hungary to attract businesses seeking to lower costs.
- $6.5 billion stimulus targeting small and medium businesses
- attracting foreign businesses and investment by improving its tax structure, labor market and incentives
According to Al Jazeera, Hungary was once the 10th most dynamic economies in the world. Yet, many multinationals that sought this growth have divested and gone elsewhere, to Bulgaria, Slovakia and Romania. Now the country may become divided on why the economic crisis has turned so sour.
The heating and plumbing business mentioned in the video blamed the left-wing government for its policies. Another family business which imported soya beans from Latin America is struggling from the Credit Crunch and a lack of liquidity to finance operations. It made it difficult to pay for the cargo.
The IMF bailed out hungary to prevent economic destablization in the region. More instability may arise due to the social services being cut in order to service debt and lack of liquidity.
Romania has received significant attention from European firms looking to lower costs and identify market opportunities. We set out to find out what is the strength of Romania's economy and what are its weaknesses.
Romania's Economic Structure
- Joined EU Jan. 1, 2007
- Real GDP: $168.8 billion (2007)
- Real GDP Growth: 5.9%
- Unemployment: 4.1%
- Inflation: 9.4% (2007 CPI est.)
- Current Account Balance: -9.4% of GDP