Hungary Since 1945 by Árpád von Klimó

Author:Árpád von Klimó [Klimó, Árpád von]
Language: eng
Format: epub
Tags: History, Europe, Austria & Hungary, Eastern, Political Science, World, Russian & Former Soviet Union, Russia & the Former Soviet Union, Geopolitics
ISBN: 9781315397405
Google: uTFDDwAAQBAJ
Publisher: Routledge
Published: 2017-12-14T01:37:31+00:00

In the wake of the crisis and on the basis of a hard politics of austerity, between 1989 and 1993 the GDP of Hungary sank 18 percent, which was more than twice the drop from 1929 to 1934 during the Great Depression. Between 1993 and 1996, at the peak of the crisis, the Hungarian economy shrank more than other “reformed states” – as Table 4.3 shows.

By the end of the millennium, however, the GDP would clearly surpass that of 1989. With $5,700 per capita, Hungary achieved one-third of the Austrian and two-thirds of the Greek per capita GDP. Of the former socialist states – apart from East Germany – only Slovenia had a higher per capita GDP, and this the case even with the agricultural sector suffering a loss of 35 percent in terms of production between 1989 and 1993, only beginning to grow again in succeeding years. Small and mid-size enterprises, whose numbers increased in the interim, were less hard hit by the crisis entailed in the transition from Communism to capitalism. Also taking up the slack were increasing exports to Western Europe, above all to Germany, total exports increasing 30 percent in 1990 alone. Helping to catalyze this development was the dismantling of trade barriers in connection with Hungary’s treaty of association with the European Community, signed on 16 December 1991. Hungary was thus able to improve its payments balance, and by 1992 it had increased its currency reserves from 4.3 to 10 million U.S. dollars. Both Poland and Hungary received assistance within the framework of the PHARE program (Poland and Hungary: Aid for Economic Reconstruction), concluded in July 1989 by the G-7 (the world’s seven largest economic powers) and coordinated by the EC Commission, Hungary receiving a billion ECUs (European Currency Units) in the form of credits and assistance. West Germany also had increased its credits and financial aid to Hungary, going from 40 to 800 million deutschmarks between 1989 and 1991. Hungary’s major trading partners in 1996 were Germany (26 percent of the total trade in goods), Austria (10 percent), Russia (9.5 percent) and Italy (6 percent). After 1989, the country’s infrastructure greatly improved in terms of buildings, transport routes, means of transport, telecommunications and electronic links. After the crisis of the early 1990s, in 1996 there was an upswing that manifested itself through high growth rates (5–6 percent) and a decrease in unemployment (slightly under 6 percent).

Table 4.3 Growth rates in East-Central Europe: 1993–1996 Country

1993

1994

1995

1996

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