Previous All-Time High FDI Inflow Doubled in Hungary

Previous All-Time High FDI Inflow Doubled in Hungary

2024. 01. 15.

The year 2023 marks yet another milestone in the history of Hungarian investment promotion given foreign direct investment (FDI) inflow exceeded EUR 13 billion. The previous all-time high of EUR 6.5 bln in 2022 was therefore doubled thanks to 209 projects in total. Out of those, 69 were large FDI deals worth over EUR 11.8 bln. The number of newly created jobs further grew by more than 30% year-on-year to 19,692, thus setting a new all-time high. As has been pointed out by HIPA CEO Mr. István Joó, the extraordinary results can primarily be attributed to the activity of Asian investors that accounted for close to 82% of the total investment volume and two-thirds of new jobs. As to the sectoral breakdown, the unquestionable supremacy of automotive and electronics continues to shape the local FDI landscape.

Last year’s key investment figures demonstrate unprecedented investor activity in Hungary. The 2023 results are truly remarkable on all fronts compared to 2022. Investment volume was doubled from EUR 6.5 billion to over EUR 13 bln year-on-year, the number of projects grew even more dynamically, whereas the number of newly announced jobs (19,692) also witnessed a substantial 30% increase. The latter job figure is a new all-time high.

Out of 209 projects, 69 were large FDI deals worth over EUR 11.8 bln. The remaining 140 projects in value of some EUR 1.2 bln were linked to the Government’s Factory Rescue Program that aims to incentivize investments related to energy efficiency improvement and the establishment of on-site renewable energy generation capacities.

These record numbers are primarily connected with the high engagement of Eastern investors, namely China, South Korea and Japan, that accounted for nearly 82% of FDI inflow and some 67% of newly created jobs. Up to 19 projects could be linked to these countries.

The key role of Asian partners has become a pattern by now which also showcases the success of the Government’s ‘Opening to the East’ policy that is meant to vitalize economic relations with Eastern countries,

Mr. Joó said.

Chinese investors alone committed themselves to invest over EUR 7.6 billion by bringing 8 projects here. The Asian powerhouse became the largest investor in Hungary after 2020 yet again. South Korea was the second largest source of inbound FDI with nearly EUR 2 bln of total investments, followed by Germany and the US.

In parallel to Asian dominance, the FDI ranking showcases that ties with our Western partners remained strong too. Germany provided the most projects (18), being responsible for every fourth large FDI deal, whereas the US also excelled in this respect by delivering 8 projects. The two countries combined accounted for creating close to 20% of all jobs. Apart from them, the UK, Denmark, France, Japan, and Switzerland contributed to the extraordinary overall results significantly. On the other hand, Hungarian companies invested the fifth largest amount overall.

As to the sectoral breakdown, automotive and electronics preserved their ultimate leading position. The combined proportion of those two sectors amounts to some 90% in terms of both new jobs and capital investment. Other key sectors include ICT creating workplaces for hundreds of highly skilled workers, whereas large-scale deals were further closed in the plastic, packaging, chemical and metal industries.

HIPA continue to place primary emphasis on striking a balance in terms of geographical distribution of developments and strengthening the position of emerging countryside locations,

the HIPA CEO added. Accordingly, altogether nearly 87% of the projects were linked to such venues. Pest county attracted the biggest number of developments (15), followed by Budapest (10), Hajdú-Bihar (8), Győr-Moson-Sopron (7) and Borsod-Abaúj-Zemplén (6).

In 2023 up to 10 R&D projects received a grant to create 810 new high-added value jobs, whereas 7 training programs should allow the upskilling of nearly 2,500 employees.

Taking stock of the 2023 results also provides an opportunity to reflect on the 10-year long operation of HIPA and our results achieved in the past decade. Between January 1, 2014 and 31 December 2023, there were up to 2,123 HIPA-guided projects in value of some EUR 49 bln to create over 150,000 new jobs. These results have been undoubtedly of transformative nature for the Hungarian economy,

Mr. Joó concluded.

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