Hungary Slapped with Hefty Fine for Extremely Serious Violation of EU Asylum Law

The European Court of Justice (ECJ) has imposed hefty fines on Hungary for what it describes as an "unprecedented and exceptionally serious breach of EU law." The decision follows Budapest's refusal to comply with a 2020 ruling concerning the treatment of migrants, which the court says Hungary has largely ignored.

Hungary has been ordered by the ECJ to pay a lump sum of EUR 200 million due to its restrictive asylum policies. Additionally, the country faces a EUR 1 million daily fine for every day of non-compliance. These fines will be automatically deducted from Hungary's EU budget allocations, parts of which are already frozen over similar legal issues.

The conflict began in December 2020 when the Luxembourg-based court ruled that Hungary, under Prime Minister Viktor Orbán, had significantly restricted access to asylum procedures. The court found that Hungary made it "virtually impossible" for migrants to file applications for international protection. It also criticized the country's practice of detaining asylum seekers in "transit zones" under conditions akin to detention and violating their right to appeal.

In a controversial policy that has drawn international scrutiny, Hungary's asylum system operates beyond its borders. Prospective asylum seekers find themselves in a peculiar situation: they must file their applications from abroad, specifically at Hungarian embassies in neighboring Serbia or Ukraine.

Those desperate enough to attempt crossing into Hungarian territory face a grim reality. Reports consistently describe a pattern of "pushbacks" - a practice where border authorities summarily expel individuals without due process. This tactic, critics argue, denies potential refugees their right to seek protection and violates international law.

Hungary ignored the judgment from 2020, which the ECJ described in a statement this week as “deliberately evading the application of the EU common policy.”

Continued Defiance
Despite the December 2020 ruling, Hungary failed to amend its policies, prompting the European Commission to initiate new legal action. The recent judgment underscores Hungary's failure to "fulfill obligations," branding it a "serious threat to the unity of EU law" with significant impacts on both asylum seekers and public interest.

The court highlighted how Hungary's actions have pressured neighboring member states, undermining the principle of solidarity and fair responsibility sharing within the EU.

Prime Minister Orbán described the court's decision as "outrageous and unacceptable," accusing Brussels bureaucrats of prioritizing illegal migrants over European citizens. The European Commission, engaged in a prolonged standoff with Orbán, has indicated it will pursue Hungary for compliance and payment of fines.

Enforcing the Judgment
The Commission plans to reach out to Hungary for a compliance plan. If Hungary fails to pay the fines, the Commission will use the "offsetting procedure" to deduct the fines from Hungary's EU funds, a method previously used with Poland. The EUR 1 million daily fine applies immediately, and a separate request will be made for the EUR 200 million lump sum, irrespective of Hungary's future actions.

Orbán's hard-line stance on migration has exacerbated tensions with Brussels. Recently, Hungary voted against every component of the New Pact on Migration and Asylum, a comprehensive reform aimed at managing irregular migration across the EU. As Hungary continues to resist EU directives, the showdown with Brussels shows no signs of abating.

Budapest Mayoral Election Too Close to Call

Incumbent Gergely Karácsony won the election for the mayoral post of the Hungarian capital this Sunday but with only a few hundred votes and main rival Dávid Vitézy announced he would ask for a recount. Municipal elections in Hungary were held in parallel with the European Parliamentary elections in which the most Hungarian Euro MP posts were won by the governing Fidesz party.

Budapest mayor Gergely Karácsony received 371,467 votes (or 47.53%) of the votes as opposed to 371,143 votes (or 47.49%) cast for Dávid Vitézy, according to data published by the National Election Office early Monday morning. This is the standing after 100% of the votes counted at a turnout of just over 65%.

At the European Parliamentary elections, 11 of the 21 seats allocated for Hungary went to the Fidesz party (with over 44% of the votes), the newly formed Tisza party can send 7 people to the European Parliament (with close to 30% of the votes), while two seats went to the Democratic Coalition (with over 8% of the votes) and one for the Mi Hazánk (‘Our Country) getting one seat with (with under 7% of the votes). These figures were published by MTI at over 91% of the votes counted.

Budapest Airport Homecoming: Hungary Reclaims Control

In a bold move signaling its commitment to national sovereignty, Hungary’s government has reclaimed Budapest Liszt Ferenc International Airport, the nation’s largest commercial airstrip. The state has officially repurchased the company managing the airport, according to a statement from the Ministry of Economy.

The deal, valued at a whopping €3.1 billion (HUF 1.2 trillion), sees the state taking an 80% ownership stake while partnering with global airports operator Vinci. The Ministry emphasized the strategic significance of this acquisition, highlighting that the airport is a vital hub not only for passenger travel and tourism but also for freight transport, playing a crucial role in the country's economic flow.

Matter of sovereignty
The repossession ends years of foreign majority ownership over one of Hungary's most critical transportation hubs. As the economy ministry bluntly stated, "the ownership of the airport is a matter of sovereignty" impacting passenger travel, freight logistics, and economic flows. The deal was facilitated by a consortium of lenders who extended a €1.44 billion loan initially taken out by the previous owners.

In a strategic partnership, the Hungarian state has joined forces with Vinci Airports, the world's largest airport operator. Hungary now holds an 80% stake in the airport, with Vinci Airports owning the remaining 20%. However, this could shift, as the government plans to sell part of its share to Qatari investor QIA, potentially reducing state ownership to 51% once the deal is finalized. Vinci Airports, boasting a portfolio of 65 airports across 13 countries, brings extensive experience to the table and will take on the management of Budapest Airport.

According to insider sources at online news portal Telex, Vinci's management expertise will guide the airport's future operations. The Ministry and Vinci Airports are set to unveil their forward-looking plans at a joint press conference scheduled for early July.

Asset sales
To fund this significant acquisition, Hungary's government undertook a series of asset sales. Corvinus International Investment Zrt, fully state-owned, successfully sold its stakes in Erste Bank Hungary Zrt, Yettel Hungary, and a substantial portion of its holdings in Hungarian VIG companies, reducing its stake from 45% to 10%.

In April, Prime Minister Viktor Orbán announced that the acquisition of Liszt Ferenc Airport was imminent, paving the way for majority state ownership. By December, the European Commission had greenlit the joint control over Airport Holding Tanácsadó Kft (Budapest Airport Holding) by Corvinus and Vinci.

Previously, Budapest Airport's ownership had shifted hands from British to German, and more recently, to a Canadian group. The German AviAlliance GmbH, backed by a massive Canadian pension fund, held the largest share at 55.44%. On Thursday, AviAlliance confirmed that its shareholders had sold their stake to the Corvinus-Vinci duo.

This move marks a significant step in Hungary's efforts to control strategic national assets, ensuring that Budapest Airport remains a pivotal economic artery under Hungarian influence. Stay tuned as we bring you more updates on this transformative acquisition and its implications for Hungary's aviation future.

EUR 74 Mn Profit for Budapest Airport in 2023

The management company of the Hungarian capital's Ferenc Liszt International Airport, Budapest Airport ended 2023 with a net profit of EUR 74 million on net revenues of EUR 337.8 million, and over the past two years, it has reduced its losses accumulated under the new coronavirus epidemic to EUR 47 million.

The company says it is due to responsible financial management and its intensive efforts to recover from the new coronavirus pandemic that it closed its second profitable year after the pandemic last year.

On the back of improving passenger and cargo traffic data, the financial results now clearly show that after 4 years, Budapest Airport (BUD) has overcome the severe difficulties caused by the coronavirus pandemic. After two very tough years in 2020 and 2021, the company was already on the road to recovery in 2022, but only managed to partially cut its losses. The recovery continued in 2023 and BUD could finally end one of the toughest periods in its history. Last year, passenger traffic exceeded previous expectations, with 14.7 million passengers using Ferenc Liszt International Airport, a 91% recovery from pre-pandemic levels. Air cargo volumes hit an unprecedented record, with the BUD Cargo City handling more than 200,000 tons of cargo. According to the company’s preliminary forecasts, the number of passengers using Budapest Airport in 2024 will surpass the record-breaking 2019 figures and approach 17 million, while cargo volumes could reach a new milestone of 240,000 tons.

All of these results are reflected in the company’s financials for 2023: Budapest Airport closed last year with a 20% increase in net revenue compared to 2022, at 337.8 million EUR. The profit after tax was 74 million EUR.

In 2023, BUD carried out capacity expansion and infrastructure developments worth a total of 77 million EUR (approximately 30 billion HUF), bringing the total amount of investments in the large-scale series of developments started at the beginning of 2019 to over 130 billion HUF by the end of 2023. Passengers were able to see new developments, such as the expansion of the self-service baggage drop-off system, the installation of soundproof booths in the terminals and the opening of a new observation and smoking terrace in Terminal 2B. Family-friendly services have also been enhanced with new play areas, and security screening has been made even more seamless with the addition of a waiting time display system, now also available on the website. The baggage reclaim area in T2A has been expanded with 520 square meters and an additional two new baggage carousels, Terminal Parking opened with 586 spaces and 8 spaces for coaches and the construction of a new airport hotel commenced. Work has also been going on behind the scenes with the refurbishment of several taxiways and the asphalt and concrete paving of the apron. The first phase of the expansion of the BUD Cargo City was also completed, with the construction of two new aircraft stands, enabling four cargo aircraft to be handled simultaneously, and the warehouse and office space of the cargo handling complex was increased by 6,500 square meters.

Last year, Budapest Airport also successfully renewed its maturing bank loans, extending an important pillar of financial stability for at least another 7 years, thus ensuring that the airport’s development will continue to be on a sound financial footing in the future.

These results, combined with a dividend not being paid out on the 2019 profit, allowed a dividend payment to Budapest Airport’s Hungarian parent company of 43 million EUR after four very difficult years. The dividend remained in Hungary, to reduce losses also accumulated since COVID at the Hungarian parent company level.

“Budapest Airport was voted the best airport in Europe last year, thanks to the work of our airport community, and this year, we have won the Best Airport in Eastern Europe award for the eleventh time. The industry has also acknowledged the significant improvements resulting from our investments by upgrading the quality rating of the airport to four stars, and Budapest Airport worked throughout last year to maintain and raise this outstanding quality,” Kam Jandu, the CEO of Budapest Airport emphasized. He added that “with a total of 28 international and Hungarian awards in one and a half years, Budapest Airport has reaped the rewards of all the effort, creative work and energy that our company has put into continuously improving the quality of the airport and the passenger experience over the past years. Our aim is to continue this effort going forward, which is already reflected in the ASQ (Airport Service Quality) results for the first quarter of 2024, where among 20 peer airports surveyed, Budapest Airport was ranked first, ahead of Prague, Alicante and Barcelona, for example. This is the first time in the history of the airport that we have achieved this prestigious position.”

Hungary Digs In Against EU Military Aid for Ukraine

Hungary's decision to veto European Union plans to provide billions in military aid to Ukraine is causing increasing frustration in Brussels. As Budapest digs in its heels, refusing to wave through the assistance packages, dismay is spreading among fellow member states.

When EU foreign ministers convened recently, tensions quickly boiled over. Even before the meeting commenced, Lithuania's top diplomat Gabrielius Landsbergis accused Hungary of systematically obstructing the bloc's foreign policy positions. "Almost all of our discussions and needed solutions and decisions by the EU are being blocked by just one country," he declared to reporters.

Continued blockade
The blockage stretches back a year, when Budapest first refused to endorse a €500 million tranche from the European Peace Facility (EPF) - an off-budget tool allowing partial reimbursements to nations providing military gear to Kyiv. Diplomats had hoped for a new €6.6 billion EPF package this week, including €860 million for arms procurement. That aspiration crumbled against Hungarian resistance.
It's merely the latest in a lengthening list of Budapest's roadblocks hampering aid to Ukraine. "We have to start seeing this as a systematic approach towards any efforts by the EU to have any meaningful role in foreign affairs," Landsbergis lamented of Hungary's recalcitrance.
For its part, Hungary – the EU's most pro-Russian member – claims its objections initially stemmed from an unofficial Ukrainian list labeling a Hungarian bank - OTP - as a "war sponsor." But as one diplomat stated, "that listing has disappeared." The goalposts keep shifting, with Budapest's foreign minister now alleging Ukrainian discrimination against Hungarian companies.

Tempers running high
With EU foreign policy decisions requiring unanimity, Hungary's veto holds inordinate sway. "Tempers ran quite high," one diplomat revealed of the ministerial confrontation, which multiple officials described as among the most heated in years.
In comments on Facebook, Hungarian Foreign Minister Péter Szijjártó said: "German, Irish, Polish colleagues created a scene, but that could not change our position, regardless of what the war-favoring politicians are shouting."
"We cannot accept that a single country, which also signed in favor of this amount a few months ago during a summit between heads of state, is now blocking this crucial aid for Ukraine," said Belgium's Hadja Lahbib, upon arriving at the meeting. "We must absolutely assume our responsibilities and do what is necessary to help Ukraine militarily," she added.
As Landsbergis pointed out, around 41% of EU resolutions on Ukraine have faced a Hungarian blockade – extending to obstructing Kyiv's EU membership talks and negotiations with Georgia and Armenia. "It has gone very, very far," he stated gravely. "We have to find a way, really, as a community to work around this."
From the heights of power in Brussels, the Hungarian roadblock casts a lengthening shadow over European unity and resolve to back Ukraine. How this deepening rift will be bridged remains unclear.

Hungary's Monetary Maneuvering: A Narrowing Path Ahead

In a move mirroring April's decision, the National Bank of Hungary once again trimmed key interest rates by 50 basis points this week. However, the monetary policy outlook beyond June remains clouded in uncertainty, with the central bank's cautious and patient approach suggesting a narrowing margin for further easing maneuvers. One more rate cut is anticipated in June before policymakers potentially hit the pause button in this year-long easing cycle.

The benchmark rate now stands at 7.25% following Tuesday's 50 basis point reduction, aligning with estimates from 24 of the 25 economists surveyed by Bloomberg. Despite the latest trim, the central bank avowed its commitment to a "careful" and "cautious" monetary policy stance, per an official statement.

Deputy Governor Barnabás Virág shed light on policymakers' perspectives during an online briefing, revealing expectations for another quarter or half percentage point rate cut in June. However, he cautioned that further easing beyond that point would have "very, very limited" room to unfold, stopping short of definitively declaring June as the easing cycle's culmination.

Hungary embarked on this rate-cutting journey a year ago after rates peaked at 18%, gradually decelerating the pace of easing over time. As Virág explained, the central bank is closely monitoring resurgent inflation, particularly within the service sector, as well as volatility in global investor sentiment – factors that could constrain further aggressive easing measures.

Aiming to fortify the forint by offering investors inflation-beating interest rates, the central bank's capacity for deeper benchmark cuts has been curbed. April saw the inflation rate climb to 3.7% year-on-year, marking the first acceleration in over a year. Virág noted that disinflation isn't anticipated to resume until early next year.

Very, very limited
"We prefer to err on the side of caution with a 25 basis point rate cut in June. However, we now give roughly equal odds to a 50 basis point easing in June," analysts at ING Bank in Budapest commented, adding that Virág's implicit guidance suggests "the further scope for rate cuts is very, very limited as far as we know at the moment." Consequently, ING predicts the National Bank of Hungary may adopt an even more hawkish stance, potentially keeping rates on hold through the second half of the year.

The central bank's cautious rate approach has buttressed the forint throughout May, with the currency remaining essentially stable and even gaining ground against the euro amidst favorable global conditions and the bank's hawkish tone. However, medium-term prospects appear murkier, with an unclear economic recovery, waning external balance outlook, fiscal risks, and the potential for a sovereign rating downgrade collectively posing risks of reigniting a "risk-off" sentiment toward the forint.

Ultimately, June's inflation report coupled with the forint's performance will be pivotal in shaping the rate outlook for the latter half of 2024. For now, the National Bank of Hungary continues to deftly navigate a narrowing path forward, weighing economic pressures against safeguarding currency stability through judicious monetary maneuvering.

MNB: Record High Green Loans Stock Last Year

Hungarian banks have disbursed almost HUF 880 billion in loans through the Green Capital Requirement Relief Program of the National Bank of Hungary (MNB), according to the aggregate amount disbursed by the end of 2023.

The head of MNB's Sustainable Finance Department, Norbert Holczinger said at a press event in Budapest on Wednesday said that the vast majority of green loans, almost HUF 673 billion, financed companies, most of them energy production and electromobility. The importance of green corporate lending is shown by the fact that its total value increased by 75% compared to the previous year, while total corporate lending increased by 4%. Of the remaining share of green lending, green housing loans accounted for HUF 123 billion and green bonds for HUF 85 billion at the end of 2023.

According to MNB's green report, climate risks of credit institutions have increased significantly, especially those financing agriculture and energy production. Overall, 16.26% of corporate credit exposures are green risky, the highest ever. At the same time, Norbert Holczinger described the upturn in real estate finance, including lending for sustainable commercial real estate, as a positive development. Energy efficiency upgrades are also becoming increasingly popular among the general public, which is important because two-thirds of the domestic housing stock is still not up to date in this respect.

The green capital market also strengthened last year, with green bonds accounting for 24% of the total portfolio. Their total rose from HUF 539 bn to HUF 860 bn in a year, with a green share of 86% of corporate bonds issued last year. The share of green investment funds is still low, but their growth rate will reach 80% in 2023, he added.

Norbert Holczinger noted that the amount of loans covered by the green central bank discount program is not negligible in the total loan portfolio today. Green financial products are becoming increasingly popular, so their uptake is set to continue, with new regulations pushing companies towards sustainability investments. The upturn in green lending is also positive because both domestic and international experience shows that green loans are less risky than others. He also said that a two-year project with the OECD and the European Commission to investigate the rising financial risks of biodiversity loss will end in June. The publication of the results of the research could be a milestone in the history of the central bank, as this area is still largely unexplored. Norbert Holczinger added that the central bank's ESG recommendation will also be published in a few months, and from Wednesday the new green website will be available alongside MNB's latest green report.

EU Approves Landmark Migration Reform Amidst Dissent from Poland and Hungary

The European Union has finalized a historic reform of its migration and asylum policy, achieving a milestone that had eluded the bloc for nearly a decade. The new regulations, part of the New Pact on Migration and Asylum, aim to create a fair and predictable system for handling asylum seekers, ensuring that all member states share the responsibility. Not all member states approve of the new legislation.

EU member states voted on five regulations that make up the New Pact on Migration and Asylum this week in Brussels. The comprehensive overhaul includes stricter screening rules, health and security checks, expedited procedures, and free counseling for applicants. A key feature is the introduction of "mandatory solidarity," requiring countries to either relocate a set number of asylum seekers, pay €20,000 per rejected applicant, or provide operational support. The initial target is 30,000 relocations per year.

Significant opposition
Despite its ambitious goals, the New Pact faced significant opposition. Poland and Hungary, staunch critics of the mandatory solidarity system, voted against the entire package. Since the reform's proposal in 2020, they have argued that it would force them to accept migrants against their will. The Czech Republic and Slovakia abstained on most of the legislation, while Austria opposed the Crisis Regulation.
However, the reform only required a qualified majority to pass, allowing it to move forward and be formally ratified. This marks one of the most significant achievements of the current EU mandate.
Southern member states, feeling overwhelmed by the influx of migrants, have long called for more support. Western and northern countries demanded stronger border enforcement and accountability, while eastern states resisted any form of relocation quota.
Italian Prime Minister Giorgia Meloni, speaking at an event in Milan this week, highlighted the ongoing resistance from various EU nations. "Hungary is not the only EU Member State to say no to the distribution of migrants," she noted, pointing out that countries like France and Germany have also been reluctant to accept large numbers of migrants from Italy.
Humanitarian organizations were divided on the New Pact. Amnesty International criticized it for potentially degrading the asylum process and increasing suffering, while Oxfam saw it as a "glimmer of hope" for a coordinated, protection-centered approach to resettlement.

What comes next
"This package goes a long way," said European Parliament President Roberta Metsola. "It will not magically solve every issue overnight, but it is ten giant leaps forward."
The final step for the New Pact is its publication in the EU's official journal. It will take two years to fully implement. Enforcement and compliance will then be crucial, particularly given Poland and Hungary's vocal opposition. Hungarian Prime Minister Viktor Orbán has already declared the pact a threat to EU unity, vowing that Hungary will resist the new rules.
Polish leader Donald Tusk has also condemned the New Pact, maintaining that it is "unacceptable" for Poland. He promised to protect Poland from the relocation mechanism, continuing the hardline stance of his predecessor.
The success of the New Pact will hinge on the willingness of all member states to comply. If countries begin to ignore the rules, the system of mandatory solidarity could quickly fall apart, undermining the entire reform effort.
As the EU moves forward, the focus will be on ensuring that the principles of solidarity and shared responsibility are upheld, maintaining unity and addressing the complex challenges of migration in a fair and effective manner.

China and Hungary Forge "All-Weather" Partnership, Chinese President Says

In a recent declaration that underscores the deepening ties between China and Hungary, President Xi Jinping characterized the relationship between the two countries as an "all-weather" strategic partnership, following fruitful discussions with Hungarian Prime Minister Viktor Orbán. The announcement came during Xi's visit to Budapest, marking the final leg of his first European tour in five years—a tour that has drawn significant attention from international analysts.

President Xi's European journey, which also included stops in France and Serbia, has been widely interpreted as an attempt to broaden China’s influence in Europe. During his time in France, Xi faced pressure from President Emmanuel Macron and EU Commission chief Ursula von der Leyen to ensure a more balanced trade relationship with Europe and to leverage his influence over Russia concerning the conflict in Ukraine. Meanwhile, in Serbia, Xi celebrated the signing of a joint statement with President Aleksandar Vučić, heralding the creation of a “China-Serbia community with a shared future” and reinforcing his vision against perceived U.S. hegemony.

Golden voyage
"China and Hungary will embark on a golden voyage in bilateral relations," Xi stated, lauding Hungary as one of Beijing’s most pivotal strategic allies.

Under the leadership of the right-leaning Orbán, Hungary has emerged as a key trade and investment partner for China, diverging from other EU nations that seek to reduce their dependency on the world’s second-largest economy. The Hungarian Prime Minister's unconventional approaches have often been spotlighted, yet his alignment with China has only strengthened.

In Budapest, the Chinese leader expressed his expectation for Hungary to be a robust member of the EU, focusing on enhancing regional connections in Central and Eastern Europe. "We are willing to take this as a new starting point to push bilateral relations and pragmatic cooperation into a golden channel and move towards a higher level," Xi remarked.

The talks between Xi and Orbán culminated in the elevation of their countries' ties to an "all-weather comprehensive strategic partnership." This ambitious linkage is set to expand into the nuclear industry and other significant infrastructure projects, including the reconstruction of the Budapest-Belgrade railway. This $2.1 billion initiative, primarily funded by a Chinese loan, forms part of the expansive Belt and Road Initiative aimed at establishing global infrastructure and energy networks.

Strong economic ties
Following the bilateral meeting, Hungary and China concluded 18 agreements, enhancing their cooperation further, as announced by Hungarian Foreign Minister Péter Szijjártó. These include plans for a new railway line around Budapest to facilitate the transport of goods from Chinese factories in Eastern Hungary to Western European markets, and a high-speed railway link between central Budapest and its airport.

As the relationship marks 75 years of diplomatic ties, it continues to evolve beyond trade and investment. Earlier this year, China extended an offer to cooperate with Hungary on public security and law enforcement, further solidifying their alliance. Since Orbán's rise to power in 2010, and more markedly over the past decade, political warmth has paved the way for substantial Chinese investments in Hungary, notably in the sectors of battery and electric vehicle production.
This burgeoning partnership reflects a strategic alignment with profound implications for the European geopolitical landscape, as both nations commit to a future of intensified collaboration and mutual development.

Hungary's Economic Expansion Trails Expectations Amid Slow Recovery

In the latest quarterly review, Hungary's economic performance fell short of analysts' projections, underscoring the challenges of a gradual recovery from a protracted recession that continues to pressure the nation's fiscal framework.

According to data released by the Budapest-based statistics office this week, Hungary's Gross Domestic Product (GDP) increased by 1.1% on an annual basis for the January-March quarter. This modest growth follows a stagnant fourth quarter and a period marked by three consecutive quarters of recession. The figures were below the median Bloomberg survey estimate, which had predicted a 1.3% growth rate. Sequentially, GDP saw a 0.8% rise from the previous quarter.
The administration led by Prime Minister Viktor Orbán had already adjusted its annual economic growth forecast downward from 4% to 2.5% for this year, necessitating a recalibration of the budget. The revision became imperative after the budget deficit reached the annual target within the first quarter alone. Earlier in the month, the government announced the deferment of approximately HUF 675 billion ($1.7 billion) in state-funded investments to align with its revised deficit target of 4.5% of GDP for the current year. This measure is anticipated to cover only about half of the necessary fiscal adjustments required to meet the deficit objective.
The economic expansion in the first quarter was hampered by a decrease in industrial production, although this was partially offset by robust performance in the services sector, particularly in real estate transactions and the IT industry, the statistics office noted.

Slow return to growth
The Organisation for Economic Co-operation and Development (OECD) has projected a more conservative growth for Hungary, anticipating a 2.1% increase in GDP for 2024, as per its latest biannual Economic Outlook. This projection is a slight decrease from the 2.4% growth forecast in November and remains below the government's target of 2.5%. However, the OECD expects growth to pick up to 2.8% in 2025, supported by declining inflation and interest rates which are likely to bolster private consumption and investment. Nonetheless, the OECD report highlighted significant risks from international trade tensions and volatile global commodity prices. It emphasized the critical nature of the fiscal consolidation pace and the outcomes of discussions regarding European Union funding allocations as primary uncertainties facing Hungary’s economic trajectory.
Moreover, the OECD advised further fiscal reforms, particularly in public pension systems to manage rising costs associated with an aging population. It also recommended enhancing productivity through increased competition in key sectors such as energy, transportation, professional services, and telecommunications, and accelerating firm digitalization through broader dissemination of digital skills.
Echoing a similarly optimistic view, the International Monetary Fund (IMF) aligns with the European Commission's latest projection, forecasting Hungary to return to growth this year. Mihály Varga, the finance minister, shared via Facebook that the IMF anticipates a 3.3% growth for Hungary in 2025.

The 20th Anniversary of Hungary's EU Membership

Following a referendum on accessing the European Union, held on April 12, 2003, Hungary – along with nine other countries – joined the EU twenty years ago, on May 1, 2004.

At the referendum, which had a turnout of 45.6%, 83.8% of the voters cast their ballots in favor of EU membership and polls suggest that still today, the majority of Hungarians are in favor of EU membership.

Prime Minister Péter Medgyessy announced the result at a celebration on the banks of the Danube by saying that "allow me to officially announce that the Hungarian republic will be a member of the European Union". The European Commission welcomed the result as marking the end of Hungary's "tragic separation from the European family of democratic nations."

The official act of the ten countries (Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia) accessing the European Union was celebrated at the residence of the Irish President in Dublin as it took place during the Irish Presidency of the EU. Hungary submitted a membership application to the EU ten years before, on March 31, 1994 and negotiations on entry began in 1998. At a summit in Copenhagen in December 2002, Hungary was one of ten countries invited to join the EU in 2004.

Chinese president to visit Hungary in May

Chinese President Xi Jinping is set to embark on a significant European tour in early May, with scheduled visits to France, Hungary, and Serbia, announced Gergely Gulyás, the head of the Prime Minister’s Office in Hungary. The visit, slated for May 8-10, occurs against a backdrop of intense geopolitical developments, including the ongoing conflict in Ukraine and rising trade tensions between Beijing and the European Union.

The symbolically charged tour gains added significance following Italy's recent decision to exit China's ambitious New Silk Road project. This move by Italy, set to be finalized by Italian Prime Minister Giorgia Meloni in July, heightens the strategic importance of Central and Eastern European countries like Hungary and Serbia as gateways for China’s land access to the EU.

Crucial partner for China
Levente Horváth, director of the Eurasia Centre, emphasized the strong economic and geopolitical alignment between Hungary and China. "Hungary's stable political and economic climate, along with its strategic location in the EU, makes it a crucial partner for China," Horváth told online news portal Index. He added that the longstanding policy of 'opening up to the East,' initiated by Hungarian Prime Minister Viktor Orbán, has fostered deepening ties with China and other Asian nations. "While we sail under the Western flag, the economic winds blow from the East," Horváth quoted Orbán's policy slogan, highlighting the need for a balanced foreign policy that embraces both Eastern and Western partners.
The Chinese President's itinerary includes a stop in Paris, reflecting the ongoing annual exchanges between France and China. French President Emmanuel Macron has committed to visiting China each year of his presidency, with reciprocal visits by Chinese leadership.

Key economic partner
In Budapest, the upcoming visit is seen as vital for continuing to attract Chinese investment, which currently includes projects worth approximately EUR 15.2 billion, generating some 25,000 jobs in Hungary. Most of these investments are concentrated in the automotive sector, underscoring China's global leadership in this industry. The economic influence of China stands second only to Germany in terms of its impact on Hungary’s economic output.
“Cooperation between CHina and Hungary has yielded a lot of benefits to both countries in recent years and the opportunities offer good hopes for the future,” Péter Szijjártó, MInister of Foreign Affairs and Trade said recently.
Additionally, the development of the Belgrade-Budapest freight railway is a key element of this visit, underscoring the strategic economic links between Hungary, Serbia, and China, further illustrating the complex and evolving geopolitical landscape in the region.

Central Bank Cuts Base Rate by 50 Basis Points

The Monetary Council of the National Bank of Hungary (MNB) cut the key ECB interest rate by 50 basis points to 7.75%, and lowered the two edges of the interest rate corridor by the same amount at its interest rate decision meeting on Tuesday.

At its most recent meeting in March, the board cut the base rate by 75 basis points to 8.25%, following easings of 100 basis points in February and 75 basis points in January.

In a background briefing after the latest rate-setting meeting, MNB vice president Barnabás Virág said that the "rapid-stepping phase" of monetary policy had come to an end, with the pace of rate cuts slowing in the second quarter and monetary policy entering a new phase.

According to a statement published on the central bank's website on Tuesday, the Monetary Council sees the inflation outlook as a reason to cut the base rate. In their assessment, the Hungarian economy is experiencing strong and generalized disinflation, growth is likely to accelerate in the second half of the year, and the country's risk perception is reinforced by high foreign exchange reserves and a sustained improvement in the current account balance. Gross public debt and the budget deficit could moderate this year, GDP could increase by 2.0-3.0%, and Hungary is expected to grow at a balanced pace from 2025 onwards.

They added that inflation in the euro area has also moderated, with weakening global demand and low commodity prices suggesting subdued inflation.

At the same time, international risk appetite has deteriorated since the March interest rate decision, with the short-term outlook for Europe mainly driven by downside risks. Continued weakness in the continent's economy may dampen Hungarian export performance, although capacity-increasing foreign direct investment may counteract this, and export market share may rise in the longer term, they added. 

The panel called for a cautious monetary policy stance in the coming months, given the risks surrounding global disinflation, volatile international investor sentiment and a sustained continuation of domestic disinflation. In their view, the inflation outlook warrants a slower pace of base rate cuts than in the past, while the volatile risk environment warrants a patient approach.

Monetary policy will continue to contribute to maintaining financial market stability by ensuring a positive real interest rate, the continuation of disinflation and the achievement of the inflation target. Macroeconomic data, the inflation outlook and developments in the risk environment will be assessed on an ongoing basis, and from April onwards, a data-driven decision on further reductions in the base rate will be taken at a slower pace than in the past, the statement said.

Hungarian Premier Calls for EU Leadership Change at Far-Right Gathering

In a fervent address at the National Conservatism Conference in Brussels, Hungarian Prime Minister Viktor Orbán called for a significant shift in European leadership during the upcoming European Union elections scheduled for June 6-9. Orbán criticized current EU leaders and voiced strong opposition to Ukraine’s potential membership in the EU or NATO.

Hungarian Prime Minister Viktor Orbán encouraged voters to turn away from mainstream political parties in the forthcoming European Union elections, criticizing them for poor leadership. He also declared that Ukraine should never be permitted to join either the EU or NATO.
“The sense of this European election is: 'change the leadership,'" Orbán stated, receiving applause from the crowd. “If the leadership proves to be bad, it must be replaced. That’s so simple,” Orbán said at a far-right gathering organized in Brussels.
The gathering, which brought together right-wing politicians and supporters from across Europe, was marred by controversy. Local Brussels authorities attempted to cancel the event, citing safety concerns, which Orbán likened to the oppression experienced in communist Hungary during the 1980s. “I think freedom in Europe, and especially in Brussels, is in danger, as yesterday it was shown,” he commented during his speech.
Orbán is aiming to influence the direction of the EU following the June European elections, which polls predict could see a right-wing surge. Such a shift to the right could significantly alter EU policies on crucial matters ranging from climate change to the ongoing conflict in Ukraine.

Buffer zone
Orbán, who has held office since 2010 and is often described as a close ally of Russian President Vladimir Putin, articulated his firm stance against the integration of Ukraine into Western political and military alliances. “Guys, you have to understand that you are a buffer zone country. You can’t change your house number,” he explained, highlighting the strategic importance of Hungary not sharing a border with Russia again.
“What the Europeans are doing is bad, it’s not targeting a cease-fire and we don’t confront seriously with all the consequences of supporting a country who is in a war which cannot be [won],” he said.
The premier stated that the conflict revolves around Kyiv's potential NATO membership, a point on which the Russian leader will not relent. "They will always do everything they can to have something between the Russian border and NATO countries’ border," he remarked. "A buffer zone must exist."
Amidst his nationalist rhetoric, Orbán also targeted the European Commission, accusing it of using the COVID-19 pandemic as a pretext to financially strangle Hungary. This accusation comes as the Commission has blocked access to billions of euros in funding due to concerns over Hungary's democratic integrity and potential financial mismanagement.
Furthermore, Orbán addressed the ineffectiveness of EU sanctions in resolving the conflict in Ukraine, marking a critical moment for EU policy as the elections could see a right-wing surge, potentially altering the EU's stance on key issues from climate change to the ongoing war in Ukraine.
As the conference concluded, Orbán’s remarks underscored a critical juncture for the EU, with his call for change resonating with a segment of Europe's populace disillusioned with the current direction of its leadership.

Katalin Karikó Donates Copy of Nobel Prize

The winner of last year’s Nobel Prize in Physiology, Hungarian mRNA researcher Katalin Karikó has donated a copy of her Nobel Prize and the prize money to her former alma mater, the University of Szeged (SZTE).

In a lecture this Tuesday, during which she reported on the events of last December's Nobel Week in Stockholm, the biochemist announced that she would donate a copy of her award to the university, as well as the more than USD half a million that will go to outstanding teachers and students.

The researcher said that many people have worked on the coronavirus vaccine and the research that made it possible, and she would like to share the prize and the money it brings with future generations.

A replica of the Nobel Prize was placed in a new permanent exhibition on the life and work of Katalin Karikó, which opened in the Study and Information Center of the University of Szeged.

Speaking to the students at the opening of the exhibition, the researcher said she was confident that the prize on display and the support generated by her donation would inspire teachers and students to be the best they can be. He said he planned to give the prize to one researcher or student each year, and would like to present the awards in person.

At her press conference, Katalin Karikó said she had spent most of the last three years at airports and airports, visiting cities she had never seen. But in the future, she wants to concentrate on her work.

She stressed that making modified mRNA is very cheap and fast. There are already more than 250 clinical trials using mRNA technology in progress worldwide. The most advanced are vaccines against viruses, so vaccines are being developed against influenza, HIV or monkeypox, but also to prevent bacterial or parasitic diseases such as TB or malaria. There is also promise for methods to make vaccines using several antigens present in tumors, or personalized methods to help a patient avoid tumor recurrence in pancreatic cancer or melanoma, or to treat peanut or dust mite allergies.

Speaking at the ceremony to welcome Katalin Karikó, SZTE Rector László Rovó said that the coronavirus vaccine gave doctors a tool to effectively fight the pandemic. The Nobel Prize-winning discovery that led to the creation of the vaccine will bring huge changes to healthcare in the coming decades, with the advent of new treatments that can significantly improve quality of life.

The Rector presented Katalin Karikó with a university lab coat. He said that the university research professor will soon be using it, as she has had her own study in Szeged since last year, the same one that once belonged to 1937 Hungarian Nobel Prize recipient Albert Szent-Györgyi.