Eastern Opening Exceeds Expectations
Hungarian Government’s Policy of Eastern Opening Sees Signs of Improvement
Hungarian Prime Minister Viktor Orbán announced over a decade ago that the country would open up more to the East to reduce the economy’s dependency on European markets. While there hasn’t been much change in trade, experts suggest that re-exports could make the Eastern opening more effective.
The 2008-2009 crisis heavily impacted the Western world, prompting Hungary to look towards the East where China seemed to remain largely unaffected. Dániel Molnár, an analyst at the Makronóm Institute, believes that the success of the Eastern opening should not be solely measured by trade figures. He emphasizes the importance of Hungarian companies integrating into production chains present in Eastern countries.
Zoltán Matheika, an industry researcher at Kopint-Tark, highlights Germany’s heavy reliance on Russian energy as a major concern, resulting in higher costs and lower competitiveness. He also notes that China’s influence on German industry and markets is increasingly significant.
The competition from Chinese firms is growing, and Germany’s struggle to keep up with developments in areas such as electromobility poses a threat to its position within the global and European markets. The implementation of Plan A, a response to these challenges, is limited by the task’s massive scale and Germany’s fiscal crisis.
Despite these challenges, the Eastern opening has benefited Hungary in terms of capital attraction. Eurostat data from 2010 to 2021 shows a substantial increase in economic contribution by Chinese (and Hong Kong), Japanese, and South Korean companies in Hungary. Their combined yearly income generated by the corporate sector has risen from 2.3 to 5.0 percent.
It is evident that the Eastern opening is providing growth opportunities for Hungarian companies and changing economic dynamics. Therefore, Hungary should continue to nurture relationships with Eastern countries and explore further partnerships to sustain its economic development.
