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Riding the wave of FDI

Muddling through deficit troubles

Buoyed up by its successful accession to the European Union, Hungary is emerging as a regional leader and riding a wave of foreign direct investment that surged last year to an estimated €3.5 billion.

Dubbed "the Ireland of eastern Europe" by its fans because of its impressive growth rate, Hungary absorbed foreign direct investment of €2.3 billion over the first three quarters of last year, up by more than a half billion euros on the same period a year previously. There are no indications that inflows are slowing down this year.

"This increase is the largest influx of foreign capital in a decade," the central bank said in a study detailing the investment, released in December.

Leading foreign investors were the Netherlands, with €600 million, Germany (with €359 million), the US (€116 million), Belgium (€87 million), Austria (€83 million) and Japan (€73 million).

Since the fall of communism in 1989, Hungary has attracted cumulative total foreign direct investment of €46.8 billion, topping the list of all the countries in central and eastern Europe. The bulk of the inflows are going into infrastructure, telecommunications, real estate, trade and industry.

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