Hungary is a country in Central Europe, situated in the Carpathian Basin and is bordered by Slovakia to the north, Ukraine, and Romania to the east, Serbia, and Croatia to the south, Slovenia to the southwest and Austria to the west. The country's capital, and largest city, is Budapest. Hungary is a member of the European Union, NATO, the OECD, the Visegrád Group, and the Schengen Agreement.
Since 1989, Hungary has been governed as a democratic parliamentary republic, and is today considered a developed country with a high-income economy. Hungary is one of the thirty most popular tourist destinations in the world, attracting 10.2 million tourists a year (2011). The country is home to the largest thermal water cave system and the second largest thermal lake in the world (Lake Hévíz), the largest lake in Central Europe (Lake Balaton), and the largest natural grasslands in Europe (Hortobágy).
The private sector accounts for over 80% of GDP. Hungary gets nearly one third of all foreign direct investment flowing into Central Europe, with cumulative foreign direct investment totaling more than US$185 billion since 1989. It enjoys strong trade, fiscal, monetary, investment, business, and labor freedoms. The top income tax rate is fairly high, but corporate taxes are low.
The Hungarian economy is a medium-sized, structurally, politically, and institutionally open economy in Central Europe and is part of the EU single market. Hungary is a full member of OECD and the World Trade Organization. Hungary is also a member of the Schengen Area and the EU single market.
In foreign investments, Hungary has seen a shift from lower-value textile and food industry to investment in luxury vehicle production (Mercedes Benz), renewable energy systems, high-end tourism, information technology.
Hungary, which joined the European Union in 2004, has been hit hard by the late-2000s recession because of its heavy dependence on foreign capital to finance its economy.
During the 2000s both the private sector and the local governments collected debts denominated in swiss franc, as interest rates were significantly lower for these types of loans. Most property investments during the 2000s were financed by CHF based credit. After 2009 the exchange rate of CHF increased from 140-150 HUF to 230-240 HUF which had devastating effects for the sector.
When the property market struggles, the marketing spin has a tendency to rise exponentially.
The hotel market in Hungary has remained comparatively stable despite the economic and financial challenges the country is currently facing according to Jones Lang LaSalle Hotels latest Hungarian Hotel Intelligence report.
Based on the latest investment market report of Colliers International Hungary, the total investment transaction volume in Hungary in 2011 was €650 million, in comparison to 2010 when the value of investment transactions was less than €200 million.
Hungary’s residential real-estate industry ground to a halt after foreign-currency mortgages, which fueled a boom before they were banned in 2010, saddled homeowners with ballooning repayments when the forint sank to a record and prompted buyers to flee the market.