Foreign investors in Hungary see present and future conditions of the Hungarian economy in a basically positive light, but the number of enterprises which would pick Hungary again as their investment destination is low from a regional perspective – according to the regular annual economic survey of the German-Hungarian Chamber of Industry and Commerce (DHUIK) presented at a press conference in Budapest.

The survey shows increasing optimism which obviously also reflects the modest improvement of the global economy, Minister of State for Economic Regulation Béla Glattfelder said of the 21st annual report compiled in February 2015 by the participation of 209 foreign companies active in Hungary. As the Minister of State pointed out, economic growth has at last become sustainable in the long term, as it has been based on steady industrial output growth instead of one-off demand-boosting measures with transitory effect.

The survey reveals that mainly large, export-oriented manufacturing enterprises plan to increase investment and hiring. In the opinion of respondents, Hungarian business environment is roughly on par with the regional average, with the exception of tax burden and tax regulation in which field Hungary scored below its regional peers; on the other hand, concerning labour regulation Hungary ranked as second in the list of 16 regional countries.

Attendees of the press conference and the subsequent panel discussion agreed that the survey indicates strong polarization. Large manufacturing enterprises – especially vehicle manufacturers – provide a lift to indicators, while retail sector operators and services providers – especially those in financial services – rather weigh down on them.

Former Director of the Hungarian Academy of Sciences András Inotai said the “extremely one-sided” structure of exports with an oversized share of vehicle manufacturing make the Hungarian economy vulnerable.

Representatives of DHUIK and András Inotai mentioned that the lack of sufficient skilled labour force may pose a medium-term threat to the industrial sector and it was the right decision that Hungary has adopted the German dual vocational training model.

Another reason for labour shortage is emigration, they concluded and Béla Glattfelder stressed that the Government of Hungary and Hungarian industrial sector operators are responsible for convincing these people to return to their homeland.

In light of the survey, only 21 percent of foreign investors find labour costs unsatisfactory, and the share of positive responses exceeded the regional average both this year and last. 41 percent of survey participants think that Hungarian infrastructure is satisfactory or very satisfactory and this indicator has been better than the regional average since 2010.

(Ministry for National Economy)