Interview with Márton Bókay, Deputy State Secretary for International Financial Relations and Outbound Investment Policy, Hungary

19 Jan Interview with Márton Bókay, Deputy State Secretary for International Financial Relations and Outbound Investment Policy, Hungary

What core factors have powered Hungary’s recent economic rebound and how do you see the country’s industrial base evolving over the next few years?

We are slightly more optimistic, projecting 2.5 percent GDP growth in 2026 with even stronger growth expected next year. Despite global uncertainties such as trade tensions and the impact of the war in Ukraine, Hungary, as one of the most open economies in the EU, remains highly exposed to external markets. After facing major shocks from COVID-19, the energy crisis and geopolitical tensions, we now see a clear economic rebound.

Both the European Commission and international institutions forecast solid growth for Hungary this year, driven by rising exports and household consumption. Industrial production is also expected to improve and to support this, the government launched a 21-step policy package last autumn aimed at accelerating the recovery. The 21-step plan focuses on three key areas. First, wage growth—real wage increases are essential to boost household consumption. The government has secured a strong minimum wage rise for the coming years, forming a solid foundation for GDP growth. Second, we are supporting SMEs, which are the backbone of our economy, providing significant employment and contributing heavily to GDP. Several programs were launched this year, with more to come—this remains a top government priority. Third, we are addressing housing. Like much of Europe, Hungary has seen a sharp rise in housing prices without sufficient new construction. Increasing housing supply is both an economic and political priority to support growth through the construction sector.

In December, the government introduced its 2025 “peace budget,” a far-reaching strategy that includes doubling family tax breaks, expanding youth housing programs and supporting SMEs under the new Sándor Demján Program. What key policy shifts are now being implemented to reinforce Hungary’s internal economic stability?

The Sándor Demján Program serves as an umbrella for key government measures aimed at strengthening SMEs and boosting their competitiveness. Maintaining Hungary’s tight labor market is also a priority. While we have avoided unemployment in recent years, labor shortages persist—an issue that could evolve quickly with advancing technologies like AI, so continuous focus on employment is essential.

On the demographic front, Hungary faces population decline, like much of Europe. For over 15 years, the government has prioritized family support through tax incentives. Key measures include exempting persons under-25 and pensioners from personal income tax to encourage workforce participation among less active age groups. These efforts aim to address both labor shortages and declining birth rates. Hungary offers generous tax benefits to support families and boost birth rates. Currently, mothers with four or more children are exempt from personal income tax for life. This will soon extend to mothers with three children and eventually to those with two. It’s a key pillar of our tax policy, supported by loan programs and other initiatives aimed at addressing demographic challenges.

Why does Hungary stand out as a top destination for foreign direct investment in 2025 and what sectors offer the most attractive opportunities for international and U.S. investors right now?

Hungary offers a highly competitive nine percent corporate tax rate, making it attractive for foreign direct investment. We have seen major inflows, especially from Germany, the U.S., Korea and China, particularly in the automotive and electric vehicle sectors. Global players like Audi, Mercedes, BMW and BYD have all established a presence here, along with key suppliers like Apollo Tyres.

The shift toward electric vehicles and battery production has been a major growth driver. Notably, BYD is moving its European headquarters from Amsterdam to Hungary—a key milestone this year. We are now focusing on higher value-added industries and diversifying beyond automotive. Hungary aims to serve as a strategic bridge between East and West and we remain open to new U.S. and global investors.

U.S.–Hungary relations in 2025 combine high-level diplomatic ties with emerging trade tensions—especially around tariffs on key Hungarian exports like steel, aluminium and autos. How would you describe the current state of U.S.–Hungary trade relations and what opportunities exist to deepen bilateral cooperation and usher in a new era of transatlantic industrial partnerships?

Hungary is working to rebuild its relationship with the current U.S. administration after several years of limited engagement. While progress is being made, the foundation remains modest and requires continuous effort. Tariffs are a key concern. Although Hungary’s direct exports to the U.S. are only about three percent, we are indirectly affected through the EU and especially the automotive supply chain. U.S. tariffs on European goods impact us significantly, as many Hungarian-made components are used in German exports. We are closely monitoring developments and pushing for constructive solutions.

You took on your current role in June 2022 following a successful career across public administration and financial services. As Hungary deepens its global financial ties, what are your top priorities for strengthening international financial relations? How do you see Hungary’s role evolving on the global financial stage in the years ahead?

This area is central to my work and close to my heart. Hungary maintains strong partnerships with international financial institutions such as the European Bank for Reconstruction and Development, European Investment Bank, International Monetary Fund, World Bank and Asian Infrastructure Investment Bank. These relationships support not only financing but also knowledge sharing, particularly in areas like SME development. Hungary actively participates in joint projects and contributes expertise in sectors where we hold a competitive edge. We value these collaborations and continue to build on them to support our economic growth.