Part 336

US diplomatic representation: chief of mission: Ambassador Donald M. BLINKEN embassy: V. Szabadsag Ter 12, Budapest mailing address: Am Embassy, Unit 1320, APO AE 09213-1320 telephone: (1) 267-4400, 269-9331 FAX: (1) 269-9326

Flag: three equal horizontal bands of red (top), white, and green

Economy -------

Economic overview: Hungary, probably the most Western-oriented economy in East Europe before the transition to a market system began in 1990, made good progress in the initial years of transition. The reform process slowed in 1993-94, however, in part because of the May 1994 elections and the resulting change in government. By 1994 the privatization of state firms had ground to a halt, while both the budget and current account deficits soared to unsustainable levels - about 8% and 10% of GDP, respectively. The situation improved sharply in 1995; an austerity program introduced in March reduced both deficits, and a renewed privatization effort later in 1995 resulted in more than $3 billion worth of sales of state firms to foreign investors - money that will be used to reduce Hungary's large foreign debt. As for other macroeconomic developments, real GDP increased 2.9% in 1994 - following several years of steep decline - and about 1.5% in 1995. Unemployment reached 14% in early 1993 before gradually falling back to 10% in 1995. Inflation has oscillated; it reached 40% in mid-1991, dropped to 17% in early 1994, and then jumped back to 31% by mid-1995. Prospects for 1996 are good. With the government still committed to austerity, both the budget and current account deficits should fall to about 4% of GDP. Economic growth is expected to be about 2% and unemployment at about 10%, with inflation falling to 20% by yearend. In March 1996 the IMF signed a new standby loan agreement with Budapest, and the OECD approved Hungary's application for admission.

GDP: purchasing power parity - $72.5 billion (1995 est.)

GDP real growth rate: 1.5% (1995)

GDP per capita: $7,000 (1995 est.)

GDP composition by sector: agriculture: 7.3% industry: 37.5% services: 55.2%

Inflation rate (consumer prices): 28.3% (1995)

Labor force: 4.8 million (1995) by occupation: services, trade, government, and other 47.2%, industry 29.7%, agriculture 16.1%, construction 7.0% (1991)

Unemployment rate: 10.4% (yearend 1995)

Budget: revenues: $12.6 billion expenditures: $13.8 billion, including capital expenditures of $NA (1995)

Industries: mining, metallurgy, construction materials, processed foods, textiles, chemicals (especially pharmaceuticals), motor vehicles

Industrial production growth rate: 6% (1995 est.)

Electricity: capacity: 6,740,000 kW production: 31 billion kWh consumption per capita: 3,012 kWh (1993)

Agriculture: wheat, corn, sunflower seed, potatoes, sugar beets; pigs, cattle, poultry, dairy products

Illicit drugs: major transshipment point for Southwest Asian heroin and transit point for South American cocaine destined for Western Europe; limited producer of precursor chemicals

Exports: $13 billion (f.o.b., 1995 est.) commodities: raw materials and semi-finished goods 36.4%, consumer goods 26.7%, food and agriculture 20.5%, capital goods 13.1%, fuels and energy 3.3% (1994) partners: Germany 28.2%, Austria 10.9%, Italy 8.5%, Russia 7.5%, US 4.0% (1994)

Imports: $15 billion (f.o.b., 1995 est.) commodities: fuels and energy 11.0%, raw materials and semi-finished goods 36.9%, capital goods 23.3%, consumer goods 22.0%, food and agriculture 6.8% (1994) partners: Germany 23.4%, Austria 12.0%, Russia 12.0%, Italy 7.0%, UK 4.0% (1994)

External debt: $32.7 billion (October 1995)

Economic aid: recipient: ODA, $136 million (1993) note: assistance received from OECD countries and international organizations, $3,700 million (1990-93)

Currency: 1 forint (Ft) = 100 filler

Exchange rates: forints per US$1 - 144 (January 1996), 125.681 (1995),105.160 (1994), 91.933 (1993), 78.988 (1992), 74.735 (1991)

Fiscal year: calendar year

Transportation --------------

Railways: total: 7,685 km broad gauge: 35 km 1.524-m gauge standard gauge: 7,474 km 1.435-m gauge (2,162 km electrified; 1,236 km double track) narrow gauge: 176 km mostly 0.760-m gauge (1995) note: Hungry and Austria jointly manage the cross-border standard-gauge railway between Gyor, Sopron, Ebenfurti, and Vasut, a distance of about 100 km

Highways: total: 158,711 km paved: 69,992 km (including 441 km of expressways) unpaved: 88,719 km (1992 est.)

Waterways: 1,622 km (1988)