BBJ: Where does Hungary rank as a destination market for German goods and a source of goods for the German market?

Julia Gross: Germany and Hungary have strong economic ties, with Germany being Hungary’s largest trading partner. German companies have significant investments in here. These relations are essential for both countries, supporting trade, employment, and innovation.

Hungary ranks 13th in the export market for German goods and 12th as a source of imports to Germany. All the countries ahead of Hungary are either larger or geographically closer. What’s particularly remarkable is that Hungary has a substantial trade surplus with Germany. The only other countries that manage this at a similar scale are China and the Czech Republic.

That said, these rankings shouldn’t be taken too seriously; this isn’t a race! In the single market, we all contribute to shared prosperity. 

BBJ: We all know about the strength of the German automotive industry in Hungary. What are the most significant industrial sectors for German FDI here? 

JG: Germany’s manufacturing sector in Hungary is broad and diverse, just as it is at home. Similar to Germany, the automotive industry plays a crucial role in Hungary. The biggest German investors are companies like Audi, Mercedes, BMW, Bosch, and Continental.

There are also machinery manufacturers like Krones or Körber. Siemens Energy recently expanded its plant in Budapest, and the same goes for Knorr-Bremse, which is active not just in automotive. Diehl Aerospace produces aircraft parts in Nyírbátor, and Airbus Helicopters is in Gyula. In terms of revenue, food retail matches the automotive industry. Lidl, Penny, and Aldi play a key role in supplying the Hungarian population. 

BBJ: What is the running total for German investments? How is it distributed across the country?

JG: We estimate that German capital investment in Hungary amounts to around EUR 20 billion. Cumulatively, German companies account for the most significant slice of FDI in Hungary. The first major German investments flowed into the Greater Budapest area due to its infrastructure and talent pool and into northwestern Hungary because of its proximity.

However, other regions have managed to attract foreign capital. BMW is building its new plant in Debrecen, Mercedes-Benz is in Kecskemét, and ThyssenKrupp opened a new production facility in Jászárokszállás. It was one of the first companies to recruit talent actively from universities in the provinces. The same goes for companies like Telekom and Bosch, along with many others.

BBJ: How many jobs have been created, in what sectors and in which regions? 

JG: That’s difficult to answer precisely, but we can safely assume that more than 200,000 Hungarians work directly or indirectly for German companies, and just as many jobs are tied to trade with Germany. The most important factor is Hungary’s integration into the European single market. The German and Hungarian economies are integrated with all other European national economies. Together, we serve the world. Alone, we would perish. Together, we are stronger!

BBJ: Are any sectors bubbling away that might be below the radar today but could become significant in the future regarding bilateral trade?

JG: It’s no secret that the German economy faces a series of upheavals. In particular, the automotive sector is set to undergo dramatic changes. After 150 successful years of developing internal combustion engines, we are now transitioning to e-mobility and other technologies.

Mechanics, in which Germany has been a global leader, will lose importance, while data and electronics will gain prominence. In this new world, German business and industry, like businesses everywhere, will have to reorientate and adapt. 

BBJ: Hungary is about midway through its presidency of the Council of the European Union. What is the German evaluation of it?

JG: It’s only half-time in the presidency, so it might be too early to draw definitive conclusions. We welcomed Hungary’s presidency program, which identified important priorities like competitiveness and EU enlargement. We remain prepared to engage, and we do engage, with the presidency wherever it aims to bring issues forward in a constructive manner, but this depends on Hungary. 

We need to have these discussions on the rule of law, on the questions of support for Ukraine, and the functioning of the single market. Resolving these issues should be made both easier and more urgent by realizing that we need each other, and both of our countries need the EU.

Our roles may seem different: Germany is a net contributor; Hungary is not and will not be for some time. But they are not so different after all. Both countries have a shared interest in a functioning and stable single market, in the free trade agreements the EU will conclude for us, and in supporting and defending European business and trade in an increasingly challenging environment.

BBJ: Hungary has a special place in German hearts because of its role in helping reunite the country. Political relations, however, have not been so happy in the past 10 years or so. How would you characterize the political relationship today?

JG: Germany and Hungary are partners and allies within both the EU and NATO. This relationship grew over centuries, it did not begin in 1989, but it came into special focus in a historical moment when Hungary shaped German and European history: Federal President Steinmeier reaffirmed this bond during his visit to Sopron last month, where he commemorated the 35th anniversary of the Pan-European Picnic, a pivotal moment when hundreds of East Germans were able to flee to Austria thanks to Hungary opening its border. 

Beyond the political relations, we have an exceptionally strong economic bond, hundreds of university partnerships, youth exchanges and twin towns, and thousands of personal friendships. This is a very strong and resilient base on which to build our relations for the future.  

Hungary Today reports: German Ambassador Summoned for “Interfering in Hungary’s Internal Affairs”

Foreign Minister Péter Szijjártó has summoned German Ambassador Julia Gross after she openly criticized Hungary’s government in a speech held on Wednesday on the occasion of German Unity Day.

“We expect respect from ambassadors serving in our country in all cases, and the ambassador’s speech is totally unacceptable. The ambassador has been summoned to the Ministry of Foreign Affairs and Trade this afternoon,” the Hungarian foreign minister wrote in a Facebook post.

As he pointed out, Germany’s ambassador to Budapest “seriously interfered in Hungary’s internal affairs in a way that violated the sovereignty of our country.”

On Wednesday evening, the German Embassy in Budapest held its traditional reception on the occasion of German Unity Day, celebrating the reunification of the Federal Republic of Germany (West Germany) with the German Democratic Republic (East Germany) on October 3, 1990.

In her opening speech at the reception, Julia Gross, Germany’s Ambassador to Hungary, recalled the important role played by Hungarians in German reunification. However, she spent much more time on an open and unvarnished criticism of her host country’s government, Mandiner reported.

At the moment, we are concerned that the Hungarian government is putting this capital, which is yours, at stake in a political bet with a completely uncertain purpose and an uncertain outcome. This confidence is now increasingly shaken,” the portal cited Ambassador Gross.

Taking a swipe at Balázs Orbán, the Prime Minister’s Political Director, she noted that “I am not referring to certain statements heard from certain politicians over the past week,” but to “a whole series of unpleasant incidents, theories, actions and provocations that seem to have no other purpose than to cast doubt on Hungary’s trustworthiness.”

 Mandiner points out that in her speech, she most certainly referred to an interview with the political director in which he drew a misleading parallel between the 1956 Hungarian Revolution and the current war in Ukraine. Balázs Orbán has since admitted that he had phrased his message poorly and clarified it.

The ambassador has reportedly denounced the prime minister’s peace mission to coincide with the start of the Hungarian Presidency of the Council of the European Union and “the theatre surrounding Finland and Sweden’s accession to NATO.”

As the portal noted, she also assumed that “you Hungarian voters – no matter what your political orientation – are increasingly asking: how does this serve my interests, how does this make life better in Hungary?”

The German diplomat also complained that the government was not represented at ministerial level, but only at a lower level, at the event, coinciding with the several-day government meeting in Geszt, Mandiner pointed out. She reportedly added, “Hungary is and will remain an important partner and ally for us.” In fact, “we are very keen to maintain our friendship and we are very keen to build trust between us.”

 She noted, however, that Hungary is on a path that is distancing it from its friends.”

Criticizing Hungary’s change of economic policy, which was necessary in large part because of the persistent weakness of the German economy, reportedly, she also indicated that “Hungary’s real friends are in Europe, and talk of connectivity and neutrality will not change that.”

These sentiments were also heard by a number of attending ambassadors from Asian countries involved in the opening-up process, the portal concludes.

*********************************

You're very welcome to comment, discuss and enjoy more stories via our Facebook page: 
Facebook.com/XpatLoopNews + via XpatLoop’s groups: Budapest Expats / Expats Hungary

You can subscribe to our newsletter here: XpatLoop.com/Newsletters

Do you want your business to reach tens of thousands of potential high-value expat customers? Then just contact us here!