Budapest Business Journal 3102

SPECIAL REPORT INSIDE THIS ISSUE

FMCG

Price Sensitivity Remains

Central in Online Shopping

One of the main drivers of GDP growth is internal consumption, or, more simply put, shopping. The more consumers spend, the happier companies are. Sadly, Hungarian growth outlooks for this year do not look very good, although there are some brighter spots out there. 17

An American expat businessman says Hungary is missing out on a golden opportunity to develop an industry of the future built on its natural strengths.  14

Proving Best for East and West

SOCIALITE

Celebrating Spa Culture and the Széchenyi Bath

The Széchenyi Bath has been voted among the best in Europe by the British newspaper website Mirror.co.uk. That accolade transported David Holzer back to the first time he encountered the famous old building, on New Year’s Eve, 2014.  21

Key Rate Remains Unchanged, No Easing in Sight

The National Bank of Hungary (MNB) left its key rate unchanged at the first rate-setting meeting of 2023, in line with analysts’ expectations. The decision signals that the MNB will continue its tight monetary policy.  3

Six months into his tenure as CEO of the Hungarian Investment Promotion Agency, István Joó discusses a record-breaking year in 2022, key industries and countries for FDI, the strength of Hungarian investments, and the 2023 project pipeline.  4

Ryanair boss Michael O’Leary announced his lowcost carrier will link the Hungarian capital to Northern Ireland from March, along with ambitious expansion plans everywhere in Europe, and hopes that Hungary will scrap its special airport tax.  10

Ryanair Reveals new Route to Belfast, Hints at More Links

Making a Lonely Case for Hungary’s Natural Strengths

EDITOR-IN-CHIEF: Robin Marshall

EDITORIAL CONTRIBUTORS: Balázs Barabás, Zsófia Czifra, Kester Eddy, Bence Gaál, Gergely Herpai, David Holzer, Christian Keszthelyi, Gary J. Morrell, Nicholas Pongratz, Robert Smyth.

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THE EDITOR SAYS

We had snow last week, which has proved a rarity this season. Enough fell for us to take the kids for a walk and for them to build a Snow Thing in the back garden. (It would have been stretching credulity to call it a Snow Man, and their description of Snow Demon seemed a little morbid.) But despite that brief Winter Wonderland, it feels like there is a sense of change in the air.

Perhaps it has been the unusually mild winter and the palpable lifting of the gloom and doom about sourcing gas and oil. Then again, maybe it is just that Michael O’Leary, of Ryanair fame, has been in town. He is a man blessed with the gift of the gab, though, as he revealed to our reporter after his press conference, in what may be a Budapest Business Journal exclusive, he has never kissed the Blarney Stone.

Be that as it may, O’Leary has never knowingly missed an opportunity to talk up his airline, talk down his rivals, and talk about whatever message he feels needs pushing. This latter point seemed to be why he was in town, for he had precious little tangible news to reveal in his conference beyond the launch of a new flight connecting Budapest and Belfast. No, this was more about what might be.

Say what you like about O’Leary, and there are plenty who do; he is not afraid of a fight. So it was last fall when we had him squaring off with various Hungarian ministers in a bout of name-calling. He was irked by what was then called an excess-profits tax and is now known as an eco-tax. They were angered by the language he used to express his displeasure. (Even now, he could not resist a sideways swipe at a “ludicrous” levy.)

To be honest, the interface between politics and business hadn’t been so much fun since Sándor Csányi, of OTP fame. The then Minister in charge of the Prime Minister’s Office, János Lázár, had a public falling out around the time the government was restricting nicotine product sales to a new system of national tobacco shops, the so-called trafiks. It is a crude paraphrase, but the core of the argument seemed to involve calling into question the ability to organize a party in a brewery.

But I digress. Ryanair is challenging the rebranded ecotax in the Hungarian Supreme Court and seems confident this “manifestly unfair” ruling will be overturned. That said, companies are always seemingly confident, right up to the point they don’t win. The real issue, though, is that a noticeably more conciliatory (or, at least, less aggressive) O’Leary was holding out the prospect of much more than a twice-a-week flight to Belfast.

“It all depends on the eco-taxes. If the eco-taxes get scrapped, there would be a significant announcement of new routes, and we would base more aircraft here. This is a market that we do want to grow, and we’d like to grow rapidly,” he said.

We will have to wait and see. Equally, this may be a false spring. We have not yet reached February, and even by the Hungarian meteorological system, winter isn’t over until March 1 (in “old money,” the spring equinox is not until March 20). There’s plenty of time for winter to blast back with a bite. And quite possibly the Hungarian courts.

Robin Marshall Editor-in-chief

Photo by MTI / Zoltán Balogh

Photo by Fortepan / UVATERV

Key Rate Remains

The National Bank of Hungary (MNB) left its key rate unchanged at the first rate-setting meeting of 2023 on January 24, which was in line with analysts’ expectations. The decision signals that the MNB will continue its tight monetary policy.

ZSÓFIA CZIFRA

It is necessary to maintain the strict monetary policy in the long-term, which ensures the anchoring of inflation expectations and the ability to achieve the inflation target in a sustainable manner, the Monetary Council of the MNB reasoned in its first interest rate decision of the year, when it kept the central bank base rate at the 13% level.

The last time the council raised the key rate was in September 2022. The board did not modify either side of the interest corridor, and the decision met analysts’ expectations.

The primary goal of the MNB is to achieve and maintain price stability, the bank said in its statement. It supports the maintenance of financial stability and the government’s economic policy, as well as its goals related to environmental sustainability, without jeopardizing the central bank’s primary goal, it wrote.

Listing the factors that continue to contribute to substantial uncertainty, the MNB mentioned that the global economy had started to slow down recently, gross domestic product had declined in many countries, the ongoing Russo-Ukrainian war, the European energy crisis, and the generally rising interest rate environment. Although raw material and energy prices have decreased significantly in recent months, they are still at high levels compared to previous years.

While the base rate remained at its previous level, a significant change was announced at the meeting. The MNB will continue to increase the required reserve ratio: from the beginning of April, it will raise its level to 10%

from the previous 5%, and from the beginning of February, it will launch discount bond auctions on a weekly basis.

macroscope

Unchanged, No Easing in Sight

Changes in Average Earnings in Hungary, 2003-2022 (January-November)

Net monthly average earnings of full-time employees (excluding public works employees), HUF/month

expected to be lowered first, and only after that can we expect the base rate to be reduced, he said.

According to him, the January data will be of outstanding importance in the development of inflation in 2023,

as the revaluations at the beginning of the year will affect the exchange rates for the whole year.

According to Magyar Bankholding’s head analyst

The goal is to ensure that the interest conditions determined through the one-day deposit rate are enforced as effectively as possible, MNB deputy governor Barnabás Virág said.

Inflation Turning Point?

He pointed out that the effects of disinflation will intensify in the coming months, the background of which, in addition to base effects, is lower raw material prices and electricity and gas consumption.

He noted that a turnaround is also emerging in the development of food costs; prices have already started to decrease in the grain market, but similar processes are expected in other sub-markets. In addition, from the domestic side, the narrowing of retail trade also acts as a “disciplining force” on pricing, he added.

He reminded that the central bank and the economic competition authority GVH cooperate closely in breaking down price increases above costs. He recalled that inflation reached 24.5%

in December; the two percentage point increase compared to November was caused by the removal of the fuel price cap, the effect of which extends into January as well, he underlined.

The slowdown in economic growth continued, as there was a decline

in two consecutive quarters [editor’s note: the fourth quarter GDP data will be published in February], but at the same time, there is a good chance that the indicator will remain in the positive range for the whole of 2023, Virág said.

The MNB continues to pay particular attention to the external and internal risk factors defined earlier, he stated. He added that the “horror” of the energy crisis has decreased, but at the same time, the end of the RussoUkrainian war is not yet in sight, and the largest central banks are still tightening for the time being.

Analysts Unsurprised

According to Magyar Bankholding’s head analyst Gergely Suppan, inflation may turn around from the beginning of the year due to increasingly strong base effects, to which the recent sharp drop in energy prices may even pose a downside risk.

Suppan expects the base interest rate to be reduced from the middle of 2023, which may be more significant in the last quarter as the rate of inflation decreases, so that it may drop to 9% by the end of 2023.

An easing of monetary conditions is not expected in the first quarter. It will come only after a substantial slowdown in inflation, commented Gábor Regős of Makronóm Institute. Even then, the one-day deposit rate is

Gergely Suppan, inflation may turn around from the beginning of the year due to increasingly strong base effects, to which the recent sharp drop in energy prices may even pose a downside risk. He expects the base interest rate to be reduced from the middle of 2023, which may be more significant in the last quarter as the rate of inflation decreases, so that it may drop to 9% by the end of 2023.

According to Regős, there is no big surprise in the commentary on the interest rate decision; it suggests the maintenance of the current monetary conditions. At the same time, the analyst said that the central bank’s press release lists factors that are optimistic about inflation and that influence it in a favorable direction.

Numbers to Watch in the Coming Weeks

December retail trade data will be published on February 6, and the Central Statistical Office will release the December industrial output figures on February 7. The much-awaited January inflation data will be out on February 10.

Record Investments Booked for 2022, With Chance to Beat it in 2023

Six months into his tenure as CEO of the Hungarian Investment Promotion Agency, the Budapest Business Journal had its first sitdown interview with István Joó. We discussed the specifics of another record-breaking year in 2022, the critical industries and countries for FDI, the strength of Hungarian investments, and the project pipeline for 2023.

BBJ: In most years, HIPA either breaks its record for investments in terms of value or is very close to it. What was the story in 2022?

István Joó: It was a successful year for HIPA because we reached new records in 2022. The investment volume amounted to EUR 6.5 billion, a new all-time high in the history of Hungarian investment promotion. And with those investments, the companies committed themselves to creating 15,000 new jobs on top of retaining 42,000. As a reminder, in 2021, the investment value was EUR 5.3 bln. So we are talking about a year-on-year increase of some 23%. We were able to close 92 deals in 2022.

BBJ: Are those 92 projects both investment and reinvestment?

IJ: It was both, and HIPA contributed mainly with non-refundable cash. We have a wide range of services we can offer to companies; identifying the necessary land, potential sites for the investment, and handling all kinds of company issues: HR-related, taxation,

cooperation with universities and higher education. We have a bunch of services that we can offer to companies.

BBJ: Which countries were the leading foreign investors?

IJ: First of all, I’d like to mention the success of the “Opening to the East” strategy of the government, which was launched back in 2012. In 2022, 48% of our investments came from Eastern countries, 42% came from the West, and Hungarian companies made 10%. HIPA deals not only with foreign investors but also helps the expansion of Hungarian companies in the country.

Our largest investor, based on volume, was South Korea. Germany was the second, and Hungary third. And this was followed by Switzerland, France and

Japan. I’d also like to mention China here because it is a vital partner for Hungary. Last year, we announced the most significant greenfield investment in Hungary’s economic history, CATL’s more than EUR 7.3 bln investment in Debrecen [230 km east of Budapest by road]. But, since physical works are just about to start in the first or second quarter, this number will be reflected in the 2023 data.

Germany is always a key investor in Hungary. Mercedes-Benz announced an expansion in Kecskemét [93 km southeast of the capital], Audi has announced some developments in Győr [119 km northwest], and BMW decided to further expand its Debrecen factory, which is now under construction. This is encouraging

news from Germany, let me name Thyssenkrupp, Kostal, Diehl, Bürkle, and Infineon, which are important partners for Hungary.

Hungarian companies were successful not just because they implemented the third-biggest investment volume in the country in 2022. They were also third based on the number of new jobs created and second in terms of the number of new projects.

BBJ: Is that a relatively new trend, the level of input from Hungarian companies?

IJ: Based on investment volume data from the previous nine years, Hungary ranked between seven and two, and typically made at least the top five over the last few years. One should not forget that HIPA deals not just with foreigners but also with Hungarians. Sometimes I need to draw the attention of Hungarian companies to the fact that they are also entitled to our services.

BBJ Automotive, especially EVs, and business services have long been dominant. Is this still the case? Are there new areas emerging?

IJ: The picture doesn’t differ from previous years because most investments took place in the electronics sector, especially battery productionrelated projects. That was followed by the automotive and food industries. These were the top three categories, but pharmaceutical and logistics-related investments are also substantial. And the business services sector and BSCs continue to thrive. More than 70,000 people are employed at such centers, and in 2022, nearly 2,500 new jobs were created for highly skilled workers in the country, taking into account all the BSC, ICT and R&D projects.

BBJ: Are any areas beginning to bubble up that look interesting for the future?

IJ: Well, generally speaking, we were happy to see the increasing number of R&D-related projects in the automotive industry, in healthcare, and also in the food industry. That is very promising because we aim to attract high valueadded investment to the country. Before 2019, our top priority was job creation quantity. Now we have shifted towards quality. Jobs with high added value are crucial for the success of the country.

And R&D-related activities are booming.

BBJ: When we talk to businesses, the concern we hear a lot is finding available appropriate workforce. Hungary has the good challenge of having near full employment. In terms of finding reserves of labor, how does that challenge develop?

IJ: As you mentioned, it is a positive challenge for the country. It is true that the labor market is very tight. In November last year, the unemployment rate was 3.8%, which is very low compared to other EU member states. But we shouldn’t forget that the unemployment rate is still higher in some regions of the country. Especially in the northern and southern areas of Hungary, we still have relatively significant reserves from which companies can benefit. Moreover,

ROBIN MARSHALL

István Joó, CEO of HIPA.

to inspire our youngsters to participate in the labor market, we exempted them from paying personal income tax from January 1 last year, which seems to have been a very successful step by the government. In 2021, we eased the participation of third-country workers in our labor market. We have a list of 15 countries from where registered recruiting companies are able to bring the necessary labor force on a fast track. Our primary objective is to help Hungarian people to have a livelihood in the country. But still, third-country workers are an option for companies. The government also launched a new program last year when the war broke out to help Ukrainian refugees who would like to work in Hungary find a job. We support companies with a cash subsidy if they hire a Ukrainian refugee. And so, this is another alternative.

BBJ: Talking of Ukraine, have you seen investors pulling out or expressing concern about investing in Hungary because of the war next door?

IJ: Foreign investors’ trust in the country and the Hungarian economy seems to be unbroken. That’s why we were able to reach another investment record in 2022. I believe they really value, first of all, the political stability in the country. Also, the lowest tax rates in Europe. We have one of the most competitive investment environments in Hungary, which is very important from the investors’ point of view. We don’t feel any adverse

effects so far. And the government does everything in its power to counter the negative effects of the economic impact of the war. Our main purpose is to avoid recession and to be a local exemption from the European recession. For this, successful investments are critical. That’s why HIPA is boosting its activities. We have the necessary financial resources to provide cash subsidies for foreign investors, for new investments or reinvestments.

Certainly, all kinds of companies, from small to large, face challenges in terms of energy prices. That’s why the Hungarian government decided to launch the so-called Factory Rescue program to subsidize the energy efficiency and energy generation-related investments of large companies. We have further launched a program for small- and medium-sized enterprises to support their operational costs. We have also reviewed a state subsidy scheme under which companies are currently able to apply for funding when building a new factory, and up to 25% of the renewable energy-related costs are eligible. We would like to push this number up, hopefully from February.

BBJ: What are your expectations for 2023? Does the project pipeline look good? Do you think you will be able to better the 2022 record, or at least get close to it?

IJ: I am confident we can make it happen, considering that the

“We were happy to see the increasing number of R&D-related projects in the automotive industry, in healthcare, and also in the food industry. That is very promising because we aim to attract high valueadded investment to the country. Before 2019, our top priority was job creation quantity. Now we have shifted towards quality. Jobs with high added value are crucial for the success of the country.”

CATL investment is reflected in 2023’s numbers; in addition, the project pipeline is very promising. I am optimistic that, in the coming months, we will be able to announce some significant investments again. Our priority is to attract high added-value investments into

the country. We welcome investors regardless of their origin, whether from East or West.

BBJ: Is there anything else to add?

IJ: Last year, 90% of the projects targeted the countryside and 10% Budapest, which shows our commitment to the countryside and its economic development.

BBJ: And it helps with the tight labor market if you can convince investors that they should go to the south or the north.

IJ: Yes, but, of course, competition is fierce in the region too, and it takes a lot of effort to secure each and every investment project.

BBJ: Finally, it’s six months since you moved into the CEO’s role. How’s that been?

IJ: I’m thrilled to lead an organization of such strategic importance because the objective is clear for me and the whole agency, and our activities are vital for the success of the economy. Nowadays, Europe is facing economic challenges. So, our task is critical. At HIPA, we have highly skilled people with significant experience in investment promotion; we have the full support of the government, the foreign ministry, and Minister [Péter] Szijjártó. We have a clear mandate to help Hungary thrive; we have to be the best investment promotion agency in the region.

Hungary, Ukraine Talk on Increasing Border Cargo Crossing Throughput Roundup Crisis Ukraine

sanctions against Moscow, alleging they have done more damage to EU economies than to Russia’s. Earlier this month, the government announced the results of a National Consultation it had earlier launched, asking the population if they agreed with Brussel’s sanctions.

Following an intensive advertisement campaign on behalf of the government declaring that these sanctions were destroying the economy, roughly

97%

of Hungarians who responded said they disagreed with them. (However, only around 1.389 million people, from a population of a little under 9.7 million, participated in the survey, representing around one in seven Hungarians.)

Hungary’s foreign minister said the country opposes the delivery of Western weapons to Ukraine because it could “lead to the prolongation or potential escalation” of the war.

met with haulers’ associations in Záhony (300 km northeast of Budapest) on January 24

Indeed, Szijjártó also warned that Hungary would oppose any sanctions the EU proposed against Russia that could adversely affect the operations of Hungary’s sole nuclear power plant, whose four reactors produce roughly half of Hungary’s electricity production, and is dependent on Russia for its fuel rod supply.

Szijjártó began by clarifying that, while his government is not in favor of the EU sending funding for weapons to Ukraine, it would not block a proposed EUR 500 million in assistance to its beleaguered neighbor. He dismissed media reports that emerged last week that Hungary intended to veto funds earmarked under the bloc’s European Peace Facility as “lies.”

Veszprém Launches

2023 European Capital of

Culture Program

The Veszprém-Balaton 2023 European Capital of Culture program was launched in Veszprém (110 km southeast of Budapest) on January 21, according to origo.hu. The program, backed by a budget of HUF 74 billion, including HUF 72 bln in central government support, involves more than 3,000 events, Aliz Markovits, who heads project company Veszprém-Balaton 2023, said. The project aims to make Veszprém, together with the region, a “new cultural hub of Europe.” The European Union designates European Capitals of Culture each year to highlight the diversity of cultures in Europe and celebrate the cultural aspects Europeans share. The other cities sharing the designation in 2023 are Elefsina, Greece, and Timisoara, Romania. Becoming a European Capital

“Instead of dead-end sanctions and hundreds of millions of euros in arms shipments, the EU should focus on peace-building in Ukraine,” he added. So far, Hungary has refused to provide Ukraine with weapons or allow their transfer across its border with Ukraine.

However, authorities have made progress regarding the shipment of other cargo across the border between the two countries. Hungarian and Ukrainian customs and border authority officials

of Culture can raise a city’s international profile, boost tourism, and generate significant local investments. Pécs (195 km southwest of Budapest) was a European Capital of Culture in 2010.

Magyar Posta Issuing House of Music Stamps

Magyar Posta issued a special block of stamps for the first anniversary of the House of Hungarian Music on January 23, writes profitline.hu. The stamp features an interior detail and the exterior facade of the institution’s building, while the commemorative envelope shows a top view of the House of Hungarian Music. Magyar Posta said it is producing 50,000 copies of the perforated stamp block with black serial numbers and 4,000 copies of the cut version with red serial numbers. The stamp was designed by graphic artist György Kara, based on the artistic photos of György Palkó, and produced by ANY Security Press. The special issue can be purchased at Filaposta, some post offices, and via Magyar Posta’s website.

to discuss accelerating throughput, according to Hungary’s National Tax and Customs Authority (NAV).

At the meeting, both countries’ authorities underscored their commitment to further improving throughput capacity at border crossings while acknowledging that the goal could only be achieved through mutual cooperation.

Consistently Opposed

In Brussels, Szijjártó recalled that Budapest has consistently opposed

100,000-plus Visited Ferenc Móra Museum Last Year

More than 100,000 visitors were curious about the exhibitions of the Ferenc Móra Museum and its exhibition spaces last year, according to profitline.hu. The museum, based in Szeged (175 km southeast of Budapest), said it had an outstandingly successful year. The most popular show was the Cowboy-Indian exhibition, which drew 40,000 visitors. The public collection attracted most visitors during the summer and fall “Night of the Museum” programs and in the days between Christmas and New Year.

MNB Issuing Coins Commemorating National Anthem

The National Bank of Hungary (MNB) has issued commemorative coins with a face value of HUF 15,000 in silver and HUF 3,000 in non-ferrous metal, marking the 200th anniversary of the writing of the poem that forms the basis of Hungary’s national anthem,

“We will never accept a single decision that would even slightly limit HungarianRussian nuclear cooperation,” Szijjártó said. “It would put the security of our national energy supply at risk, and nobody should expect that from us.”

Hungary’s foreign minister also called on Ukraine’s government to respect the rights of the Hungarian ethnic minority in the western Ukrainian region of Transcarpathia. According to Szijjártó, ethnic Hungarians there had recently been victims of “concentrated attacks” by local authorities.

the central bank said in a release on its website. This year’s MNB commemorative coin issue program started with commemorative coins designed by the sculptor Tamás E. Soltra. A total of 5,000 pieces of the silver version and 6,000 pieces of the non-ferrous metal version will be made. The obverse of the commemorative coins shows a halflength portrait of Ferenc Kölcsey, the poem’s author, stepping forward from the divided background.

El Greco Exhibition Attracts 100,000-plus Visitors

An exhibition of the work of El Greco (1541–1614) at Budapest’s Museum of Fine Arts has attracted more than 100,000 visitors since it opened late in October, according to state news agency MTI. The show of more than 50 of the artist’s works, including items on loan from the Prado, the Louvre, the National Gallery in London, and the National Gallery of Art in Washington DC, runs until February 19.

NICHOLAS PONGRATZ

Minister of Foreign Affairs and Trade Péter Szijjártó encapsulated the latest developments for Hungary regarding Russia’s invasion of Ukraine in statements he made during a meeting of the European Union’s Foreign Affairs Council in Brussels on January 23.

Destruction at Kherson International Airport in Chornobaivka, Kherson Oblast in Ukraine on November 20, 2022. Hungary’s foreign minister Péter Szijjártó has continued to push the Hungarian line that the EU should abandon sanctions against Russia and arms shipments for Ukraine and “focus on peace-building” instead. Photo by Jose HERNANDEZ Camera 51 / Shutterstock.com

CEE Investments Stable Despite Economic Environment

“The war in Ukraine has affected the economic situation of all countries from the CEE region, ESG moves from ‘nice to have’ to a market standard in all RE market segments, and increasing construction, operation, and transportation costs translate into increasing costs in all real estate sectors. These are some of the key findings in Highlights 2022: CEE-6 Real Estate Market,” the consultancy says in its outline.

Last year saw a slowdown in investment volumes compared to previous years, owing to the elevated financing costs, availability of fewer products and general market uncertainty.

“Investors from the Czech Republic, Hungary, Romania and Slovakia, in particular, proved that local market knowledge and presence are the keys to success. Approximately 35% of the investment volume came from CEEbased investors,” Colliers says.

“Asset price corrections compared to the level before the war generate appealing market opportunities for investors. Further inflows of capital from Romania, the Baltic States, the Czech Republic and Hungary are expected,” it continues

Significant Transactions

There were two particularly significant transactions in Hungary in 2022. The first of these was the acquisition by Groupama Gan REIM, on behalf of SCPI

Affinités Pierre, of the 20,000 sqm Green Court Office for EUR 77 million from CODIC Hungary and Pesti Házak. The other was the purchase by Hungary’s Adventum of the Tesco portfolio in Hungary and the Czech Republic for EUR 219 million.

Concerning the supply of assets, Colliers has traced 200,000 sqm of speculative office assets delivered during 2022. Further, a noted delivery was the long-awaited MOL Campus building. The new MOL headquarters provides Budapest with its first skyscraper at 147 meters tall in South Buda’s riverside BudaPart development, which is seeing the creation of an entire neighborhood of retail, office and housing units.

In comparison, only 77,000 sqm was delivered in the Prague office market, the third-lowest volume over the last 10 years. This is despite gross take-up reaching 500,000 sqm, making it one of the most successful years for the market. 2022 saw the lowest level of supply in most CEE office markets, although demand is again reaching pre-COVID levels, with hybrid working as the norm.

In Poland, the volume of office delivery in eight of its regional cities exceeded that of the capital Warsaw for the first time.

In the hotel market, the deteriorating operating environment could cause a number of underperforming hotel projects to become insolvent,

providing opportunities for investors and private equity firms to buy them at a favorable discount.

Notable Success

A noted success for incoming investment into Hungary is the signing last year of an agreement between the municipality of Debrecen and Contemporary Amperex Technology Co., Limited (CATL), a Chinese global leader in lithium-ion battery development and manufacturing.

The most extensive greenfield development yet in Hungary will see the building of what is described as the largest battery factory in Europe, with the new manufacturing facility to be delivered on a 220-hectare site in the south of the city.

The volume of investment into the project is put at EUR 7 billion, and 9,000 people will be employed at the factory. That is a significant number under any circumstances, but especially so in Hungary, where the labor markets are tight, and the recent government priority has been attracting high added-value jobs, placing quality over quantity.

Production is planned to start in 2025 with Mercedes Benz and BMW, both of which have their own plants in Hungary,

intending to use the batteries in their products. BMW’s factory, which is under construction and, when operating fully, will produce 150,000 electric vehicles a year in a EUR 1 billion investment, is also located in Debrecen.

GARY J. MORRELL

The year 2022 saw an increasing trend for the prominence of domestic Central and Eastern European capital across investment transactions in the region and a downturn in investment activity, according to Colliers in its latest CEE regional report.

“Investors from the Czech Republic, Hungary, Romania and Slovakia, in particular, proved that local market knowledge and presence are the keys to success. Approximately 35% of the investment volume came from CEE-based investors. Asset price corrections compared to the level before the war generate appealing market opportunities for investors. Further inflows of capital from Romania, the Baltic States, the Czech Republic and Hungary are expected.”

The 20,000 sqm Green Court Office, bought by Groupama Gan REIM, on behalf of SCPI Affinités Pierre, for EUR 77 million from CODIC Hungary and Pesti Házak.

Marketing Director for Pernod Ricard Hungary

Rita Hruska has been appointed marketing director of Pernod Ricard Hungary, coming to the Hungarian subsidiary of one of the world’s leading alcohol producers from her position as brand manager of Dreher’s international brands.

At Pernod Ricard, she will be responsible for marketing global brands such as Absolute Vodka, Beefeater, Jameson, Ballentine’s, and Chivas Regal.

“It is a huge honor to work with such globally renowned and iconic brands as those in Pernod Ricard’s prestigious and comprehensive brand portfolio,” said Hruska. “I will use all my experience to make these brands even better known and more successful in the domestic alcohol market.”

Hruska graduated from the International Business School with a degree in Marketing Economics and started her professional career at British American Tobacco. After a twoyear management training program, she focused on innovative marketing solutions, built premium brands, and launched several successful products.

Firm (LKT), was promoted to partner as of January 1, 2023.

Specializing in litigation and arbitration and also active in the Corporate and M&A Group, Fazakas joined LKT in September 2010 as a trainee lawyer straight from university.

He was promoted to head the Dispute Resolution team in 2020 when the Litigation and Dispute Resolution Group was enlarged and restructured.

Fazakas is an acknowledged lawyer before the Hungarian and international courts and arbitration tribunals and is highly ranked by international rating agencies. He is a qualified ICC Arbitrator, organizer and judge of the annual Budapest Willem C. Vis PreMoot (International Commercial Arbitration Moot), and trainer of new litigation waves.

most prominent startup accelerators in the Central and Eastern European region. She notes that WeAreOpen’s thought leadership can have a serious social impact locally, adding that real change begins at the microcommunities level. Still, the creation of the foundations of openness within WeAreOpen’s business community can ignite positive change in broader society, she says.

Sásdi is the CEO of Publicis Groupe Hungary and co-head of Publicis Le Pont, which unites the Czech, Polish, and Hungarian expert centers of Publicis. Since January, she has held the position of WeAreOpen’s board chairperson in addition to her current roles.

According to a press release sent to the Budapest Business Journal, her commitment is both value- and business-based: as the leader of the country’s most significant creative and media market player, she believes that diversity and inclusion are the basic conditions for outstanding business operations.

Berea has extensive experience in top-ranked law firms, both international and local. She has been a member of the Romanian Union of Lawyers and the Romanian Bar Association since 2004 and has an online MBA Essentials certificate from the London School of Economics.

Gábor Kovács, BLS-CEE’s co-founding managing partner, commented: “Having a strong team in Bucharest unlocks the potential for offering integrated business law solutions to clients for Hungary and Romania.”

BLS-CEE’s Budapest team has also grown: Chen Chen has joined forces with the firm to develop business law solutions tailored to the needs of Chinese investors in the region.

In 2009, she joined Zwack Unicum, where she initially managed the Johnnie Walker brand and then the flagship Unicum brand team, as well as representing international brands such as Moët & Chandon, Hennessy, Evian, Baileys, and Captain Morgan.

From 2019, she worked at Dreher, where her main task was to strengthen the international super-premium brand portfolio (Pilsner Urquell, Peroni, Asahi), positively shaping consumer perceptions, increasing the company’s super-premium share of the domestic beer market.

Balázs Fazakas Made Partner at Lakatos, Köves & Partners

Balázs Fazakas, head of the Litigation and Dispute Resolution Group at Lakatos, Köves & Partners Law

“Balázs has been instrumental in leading the dispute resolution practice at LKT with tireless dedication in the last few years,” commented LKT managing partner Péter Lakatos. “Péter Köves and I believe that Balázs as a partner will further develop LKT’s rightly recognized and well-known dispute resolution practice. He is a very talented litigation and arbitration lawyer with outstanding expertise.”

Commenting on his promotion, Fazakas said, “Being promoted to partner at LKT is an honor for me and an important milestone in my professional career. I’m grateful to have had the chance to learn and work with such internationally recognized, outstanding litigation lawyers.”

Two Leaders Join WeAreOpen

Hungary’s market-leading diversity, equity, and inclusion organization, WeAreOpen, has been expanded with two new leaders. Nóra Várady became CEO, while Helga Sásdi was named the new chairperson of the board of directors.

Várady transferred to WeAreOpen from CEU InnovationsLab, one of the

In addition, Márton Beck, communication strategist and founding member of the MindMiners Collective, has joined WeAreOpen as a strategic adviser.

“In today’s world, the basic expectation of workplaces is that employees are judged based on their performance regardless of skin color, religion, gender identity or sexual orientation; that is, to operate in an open manner. With the arrival of Helga, Nóra, and Marci, I think that the relationship between WeAreOpen and the domestic corporate sector will rise to a new level,” said Péter Árvai, founder of WeAreOpen and honorary chairman of the board.

Partners Strengthen BLSCEE’s Regional Growth

Romanian law-qualified lawyer Iulia Berea (Stoianof) and her team based in Bucharest have joined BLSCEE. A Romanian law-qualified lawyer, she is highly specialized in corporate, M&A, labor, data protection, consumer protection, and environmental practices.

Chen is a collaborating partner of BLS-CEE with extensive knowledge in managing legal matters concerning the European operation of the subsidiaries of Chinese Enterprises. She is specialized in corporate M&A, construction, real estate, dispute resolution, and arbitration and is fluent in English, Hungarian, and Chinese.

“Fleeing Big Law and sharing her time between Hungary and Switzerland, Chen was seeking a legal community that enables her to thrive and take her professional career to the next level. We are very proud that she chose us,” Kovács commented.

WHO’S

Rita Hruska

Balázs Fazakas

Nóra Várady (left) and Helga Sásdi

Iulia Berea

Chen Chen

Historic Krausz Palota Renovation now Approaching Completion Green Matters

A monthly look at environmental issues in Hungary and the region

This requires the redevelopment of the building in accordance with thirdparty sustainability accreditation to attract tenants to the Class “A” office market strata and high-end retail and to comply with environmental regulations regarding emissions and energy usage.

EU Taxonomy Adaptation on the European Market

“I see EU taxonomy adaptation on the European market as one of the major sustainability achievements of 2022,” says Zsombor Barta, president of the Hungarian Green Building Council (HuGBC).

“Although many local real estate stakeholders might not yet realize the importance of this, in the midterm and on a larger scale, this is a very important framework towards a more sustainable future and aligned with the ambitious 2050 zero carbon targets as well,” he adds. Barta points out that financial institutions now need to report on their portfolio’s EU taxonomy ratio, and projects which comply with the Taxonomy criteria are eligible for financial incentives. He argues that this will have an enormous

“We do not take any shortcuts when it comes to carefully repositioning such a prestigious building in the heart of Budapest,” comments Jake Lodge, principal of Avison Young Hungary, which is responsible for the renovation project. “In order to provide our future tenants with a combination of modernity and historic tradition, we did not shy away from hand-picking materials and selecting specialized architects while targeting a Breeam ‘Excellent’ certification to ensure the asset’s long-term attractiveness in the local market.”

The architects for the project are Bord Studio. Realiscon advised on and completed the Breeam assessment and also performed the project management.

impact on real estate stakeholders and push the entire sector toward a more energy-efficient and sustainable future.

Additional EV Charging Points at Budapest Airport

Budapest Airport (BUD), the operator of Ferenc Liszt International, has added 83 electric vehicle charging stations resulting in 102 additional charging points at the airport.

“E-mobility is a key pillar of Budapest Airport’s sustainability strategy, which is why the airport operator has placed emphasis on expanding its electric vehicle fleet and build an electric charger network. In 2022, Budapest Airport applied for the EU CEF 2 Transport – Alternative Fuel Infrastructure Facility funding program with its Net Zero Airport project, and a grant for

“Renovating a heritage building has had many challenges, including undoing numerous changes inflicted on the building over the years, removing entire floor slabs, and replacing the building’s mechanics with efficient modern systems, thereby transforming Krausz Palota into a commercially viable and premium commercial property fit for modern businesses,” Lodge says.

Discussing the difficulties of redeveloping historic buildings, particularly one that has undergone several function changes, into sustainable offices as opposed to greenfield projects, he explains that the process can be very demanding and throw up many surprises, like unexpected supporting beams that were not on the historical plans.

the installation of 83 charging stations and 102 charging points was recently signed,” BUD said.

BMW Leading in EV sales

Dealerships belonging to the BMW group sold 550 purely electric models in Hungary in 2022, of which 460 were BMWs and the remaining 90 Minis. Sales of EVs thus increased by 119% compared to 2021, making BMW the most popular electric car manufacturer among premier brands, according to the automaker. The company is building a factory that will produce 150,000 electric cars a year in Debrecen (231 km east of Budapest by road) in a EUR 1 billion investment.

Increased Focus on Green, Efficient Buildings

Green and efficient buildings are in focus, becoming much more than

Lodge says you only really get to know about these skeletons in the cupboard once you have pressed the button on the refurbishment and demolition works; therefore, a great degree of innovative thinking is required to solve these issues.

“There are very few opportunities (if any) to develop greenfield modern office buildings in the CBD [Central Business District]. Locations within UNESCO world heritage sites, especially on the famous Andrássy út, need to fully embrace the underlying architecture and heritage of these classic buildings. It would be a travesty to knock down these majestic buildings in the sole interest of generic office buildings in order to maximize buildable sqm,” he adds.

a simple check mark that companies and investors include in their reports to shareholders, says Colliers in its “10 Predictions for the CEE-6” report. This is because efficiency can yield actual (and quite significant) financial benefits. Consequently, Colliers consultants expect to see a greater differentiation in the rent/value of a building based on how green/efficient it is for all countries in the CEE-6 group. This should apply to all real estate sectors, but particularly to offices and industrial. “ESG moves from ‘nice to have’ to a market standard in all RE [real estate] markets,” says Colliers. In Bucharest, the 28,000 sqm America House has become the first project in the Romanian capital to be awarded Breeam “Outstanding In-use” certification after EUR 10 million was spent on the development with the certification process undertaken by BuildGreen.

The modernization of the Krausz Palota at Andrássy út 12 is nearing completion. The listed building was acquired in 2019 by the investment manager AEW on behalf of its clients and is part of a trend for investors and developers purchasing such classic architecture in the historical center of Budapest and renovating for use as top-end offices and street-front retail complexes.

GARY J. MORRELL

Ryanair Reveals new Route to Belfast, Hints at More Links From Budapest

Ryanair boss Michael O’Leary announced his low-cost carrier will link the Hungarian capital to Northern Ireland from March, along with ambitious expansion plans everywhere in Europe, and hopes that Hungary will scrap its special airport tax.

But aside from excitedly talking up his company’s numbers, some seemingly contradictory statements, and typical O’Learyesque disparaging of rival carriers, he presided over what may have been one of the most newsless news conferences ever held in Budapest on Tuesday, January 24.

But, ever the show host, O’Leary began brightly and steadfastly maintained his stance to the end.

“The good news this morning is that this will be our largest summer schedule [in Hungary], and we have one new route to announce, linking Budapest with the exciting city of Belfast, in [Northern] Ireland. So those of you looking for a sun getaway destination can sample the delights of Belfast this summer,” he quipped, in defiance of the facts.

(According to website weather and climate sites, “sunspot” Belfast has 1,302 hours of sunshine per year, while Budapest has 1,890, some 45% more.)

The CEO was also a little unsure regarding the number of weekly flights to the province, initially claiming “three or four” before, being pressed for accuracy, he asked an aide. “Two,” the assistant clarified.

O’Leary then launched into his regular spiel about Ryanair as Europe’s largest, greenest and cheapest airline, which is aiming to add 51 new planes this year to its fleet, and its recovery post-pandemic.

“We’re operating this winter at

110%

of our pre-COVID capacity. That is a record across Europe; most of the legacy airlines are operating at about 70% of pre-COVID capacity,” he said.

Turning to Budapest, he insisted the Hungarian market was proving most resilient, achieving monthly load factors in the last quarter of 2022 of 92-94%.

With eight aircraft based at Budapest Ferenc Liszt International Airport (unchanged from last year), Ryanair expects to carry four million passengers to and from the Hungarian capital over the next 12 months, “making us the number one airline in Budapest [...] We have about 10% more flights than Wizz Air, and [will] have a 32% market share, with Wizz Air down to 29%,” he forecast.

Risks to Recovery

Listing the prominent risks to the recovery, he noted potential “adverse news flow from Ukraine,” COVID, and concerns over inflation eating into disposable incomes. However, he stressed that, thus far, “we haven’t seen any evidence of that.”

Notably, unlike his press conference in Budapest last September, while critical, he was far less discourteous to the Hungarian government over the special tax slapped onto airline passengers from July last year.

Asked to clarify the current situation, O’Leary responded: “As you know, the government have changed the format of that tax from this ludicrous excessprofits tax, which was levied on handling agents, which, of course, was never

going to be levied on handling agents. It’s now an eco[logical] tax, although we continue to think it is manifestly unfair.”

He then read an email from his legal team, which is fighting to have the tax rescinded via Hungary’s Constitutional Court.

“We had a hearing in the Hungarian Constitutional Court yesterday [… which] we believe went well. The judgment is expected in the first half of

2023

[…], and we trust that the Court will make the right decision and overturn this anticonsumer, anti-competitive and nonenvironmental tax. And then my lawyer says: ‘And don’t say anything else!’”

Asked if his carrier planned any further new routes from Budapest, O’Leary initially cited his current mantra: “It all depends on the eco-taxes. If the eco-taxes get scrapped, there would be a significant announcement of new routes, and we would base more aircraft here. This is a market that we do want to grow, and we’d like to grow rapidly.”

Declaring Budapest as “a city with cultural vibrancy” and one of the

“great city-break destinations across Europe, all year round.” Its potential is “just being strangled by this silly ecotax that raises so little money for the government,” he added.

“We have Ireland pretty well covered now we’re linking Budapest to Dublin and Belfast; that’s more or less all you need. But there are lots of more routes we’d like to link to Budapest,” he said, citing Italy, Scandinavia, Spain and Portugal as being of particular interest.

Likely Passenger

Asked by the Budapest Business Journal about the passengers likely to use the new Belfast flights, O’Leary said he expected a good flow of inbound visitors coming to Budapest for a city break.

“It’s a new destination for Belfast. The city has a lot of flights to the U.K. and European sun spots, Spain, Portugal and Italy, but it doesn’t have these kinds of interesting European cities.”

“It’s a new destination for Belfast. The city has a lot of flights to the U.K. and European sun spots, Spain, Portugal and Italy, but it doesn’t have these kinds of interesting European cities.”

There would be Hungarians living and working in Ireland and their equivalents resident in Hungary. At the same time, “there are probably a few crazy Hungarians who want to go to Belfast for a weekend. There’s [the] Titanic, pubs, […] there used to be a war on up there about 20 years

ago, [and] you can do interesting taxi drives around the [former troubled areas]. We don’t know who’ll fly there, but we’re pretty sure with our prices, we’ll be able to fill our [planes],” he said.

The new link was welcomed, if with certain reservations, by Thomas Sneddon, a professional translator, originally from Northern Ireland and now living near Budapest.

He told the BBJ: “Yes, there was already talk of it when I was home at Christmas, but we didn’t know how many flights there would be. Twice a week is fine, but it’s a pain that all the return flights to Belfast are at 6:30 in the morning.”

Regardless of the bleary eyes and hangovers likely to be encountered by some segments of the passenger market, Ryanair usually does its homework when launching new routes.

However, given the paucity of hard news offered in the 42-minute press conference, the BBJ asked O’Leary afterward how frequently he took the trip to county Cork to kiss the Blarney Stone, a limestone rock in Ireland which traditionally gives the kisser an enhanced level of eloquence.

The former accountant retorted: “I’ve never been there, and I come from Cork. I’ve been talking shite now for 40 years, all my career, so I don’t need to go there!”

KESTER EDDY

Michael O’Leary and CEE Country Manager Alicja Wojcik Golebiowska.

Equilor Predicts Calmer 2023 for Economy, but Energy Prices Could Still Surprise

The milder-thanusual winter has so far had a positive impact on gas prices, bringing relief to the whole European economy, including Hungary, but this does not mean the end of the economic crisis triggered by the Russo-Ukrainian war, Equilor analysts warn.

According to Equilor Investment’s annual outlook, the Hungarian economy is likely to show low growth of 0.5% this year; annual inflation could reach 18%. At the same time, the forint could return to a slightly weaker path after strengthening and stabilizing in recent weeks, and the euro return to around HUF 415. At the same time, energy price developments will remain a key determinant of inflation rates, which economies fall into recession, and how quickly they recover.

For all that 2023 might see a calmer economy than last year, the first and second halves could differ significantly. One of the critical questions remains the gas price evolution, which is a crucial determinant of inflation, especially

for European economies. In addition to the warm winter, subdued energy demand from industrial consumers has helped to keep reservoirs at levels well above the five-year average, contributing to the TTF-listed gas price falling from a peak of close to

EUR 300

to close to EUR 50.

According to Equilor, unless there is a drastic change in the weather, we could turn to the new filling season without any supply problems. Another critical question is which economies could sink into recession this year and how quickly they will recover. Equilor believes H1 will see hardship and recession in most European economies, including Hungary, while H2 could see growth resume.

Europe could avoid recession in 2023 thanks to the mild winter, but rising financing costs and energy shortages could lead to a restructuring of the economy, with entire industries transformed.

Slow Growth

Equilor expects GDP growth of around half a percent this year in Hungary. Domestic consumption may fall due to the general rise in prices, many

corporate investments could be postponed due to higher financing costs, public investment may be cut back, and the uncertainty surrounding EU funding has not been resolved.

Inflation is likely to be around 18% this year due to imported inflation and the stickiness of the price-wage spiral but could ease to about 7% in 2024, according to senior analyst Lajos Török. Further restraint in government spending and a reduction in the import ratio will be essential to halt the rise in the current account and budget deficits.

Labor shortages are growing in several sectors and occupations, leading to a dynamic upward trend in average wages, but the unemployment rate is expected to remain below

4%

for a sustained period.

The tightening policies of the major central banks could reach their interest rate peak in the second quarter and remain in place throughout the year, adversely affecting capital market movements, the analysts note.

The National Bank of Hungary (MNB) completed its cycle of base rate hikes at the end of September, but the intense weakening of the forint led it to continue monetary tightening through unconventional means. Since then, the benchmark rate has been the overnight deposit rate, which remains unchanged at 18%.

Key Conditions

The MNB has set six key conditions for the start of the rate cut, which has not been fully met so far. Török says he does not expect a rate cut until the second quarter at the earliest, although it may come before inflation peaks.

He adds that it is worth keeping an eye on credit rating agencies, as downgrades are expected. The first scheduled rating review came from Fitch Ratings on January

20,

and while Hungary’s “BBB” sovereign rating was affirmed, the outlook was changed to “negative” from “stable.”

At the end of January, S&P Global Ratings is expected to warn of existing risks but hold off on downgrading due to new deadlines for European Union funds. If a full agreement with the EU is not reached in March, a downgrade (to BBB-, which is still investment grade) could be expected at the following review in July.

At the moment, the forint is being squeezed by opposite influences. Among the risks, the January ratings, continued conflicts with the European Union, disagreements between the MNB and the government, and the fragility of favorable international investor sentiment are all worth highlighting.

The forint could be supported by high-interest rates, a possible further weakening of the dollar, and any positive news on EU funding. Overall, though, the Hungarian currency could be on a slightly weakening path in the second half of the year, and the euro could return to the previously seen high of 415 HUF/EUR.

Investment Opportunities in 2023: Equilor’s Long-term Portfolio Recommendations

In terms of investments, this year could be a good time to build longterm portfolios, according to Equilor. Last year’s bear market has improved equity pricing, and a significant yield rise has opened up the space for bond investments again.

According to senior analyst Lajos Török, it is worth building a long-term portfolio this year, with the HUF and EUR versions of the premium Hungarian government bond and the newly issued dollar-denominated Hungarian government bond being important building blocks.

Higher risk takers could consider value stocks in developed markets, and Indian and Chinese equity markets could also perform relatively well in the period ahead. In China, the squeeze on the corporate sector may ease following the relaxation of the zero-COVID policy. Restoring stability in the property market has fueled a rally in Chinese technology stocks in recent weeks.

India could overtake China as the world’s most populous country and attract increasing attention from investors. The country’s economy could expand by 6.1% this year, and inflation could fall to 5.1%, making it the globe’s fifth-largest economy.

India could benefit from cheap Russian energy supplies, and a more pro-Western leadership compared to China could also encourage foreign investment and factory relocations. A favorable age profile could also help the Indian economy to perform relatively well over the next decade.

GERGELY HERPAI

From left, Dániel R. Kovács, managing director, Front Page Communications, Bálint Szécsény, chairman of Equilor Asset Management Ltd., senior analyst Lajos Török, and Szilárd Buró, head of online trading at Equilor Investment Ltd.

Building From a Position of Strength to Drive EV Sales

Since June 2022, Andrea Kővágó-Laky has been managing director of Ford in Hungary and the Czech Republic. The Budapest Business Journal sat down with her to better understand the regional market and how she sees it developing.

MARSHALL

BBJ: How do you view the current state of the market in the two countries, and how do you see their future development?

Andrea Kővágó-Laky: In some ways, they are similar; smaller countries with a similar number of inhabitants, around 10 million. If you look at the key economic indicators, unfortunately, both are in a challenging situation in terms of inflation at the top of the league table, and the base rate is also higher than the European average. But in the automotive sector, there are differences. If you look at motorization, Czech is much ahead of Hungary. Regarding the number of passenger vehicles per 1,000 inhabitants, in the Czech Republic, we have 573, and the European average is 560. When it comes to Hungary, we are much below the European average with 401 units. Czech is number eight in the ranking, and Hungary is 23rd. If you look at the automotive market size, Czech last year was at 219,000 units, and Hungary at 135,000, including passenger and commercial vehicles. So, it’s clear that the Czech potential is significantly higher, 61% above Hungary’s.

The strategy was different in the two markets. In Hungary last year, we were the number three brand. And we are traditionally strong in the commercial vehicle area, where we were number one last year. That’s a long story for us; we have been leading that segment for more than 10 years. And we were number one within the fleet segment; our overall share was roughly 10%. When it comes to commercial vehicles, basically every fourth unit sold in Hungary last

year was a Ford. We are very proud of that. Looking at commercial vehicle sales penetration into total sales, it’s very interesting. In the 28 years I’ve worked for this company, there wasn’t a year when we sold more commercial vehicles than passenger cars. But that happened last year in Hungary: 7,462 commercial vehicles and 6,133 passenger vehicles.

In the Czech Republic, though the potential is high, we are constantly focusing on finding the right balance between volume and profit. For the time being, we have a lower share at around 4.4%, and we were only number seven in the market. So, when it comes to that country, our future strategy is growth, while in Hungary, we have to focus on finding the balance between market share and profitability. 2022 was a very challenging year for any importer in Hungary because of the forint devaluation.

BBJ: What steps is Ford taking in switching to a non-fossil-fueled future?

AK-L: Ford is deeply committed in terms of sustainability. It’s critical for us to be a responsible company, and it’s a key focus to speed up electrification, which is a challenge not only for Ford, but also for other manufacturers. What we do for our part is heavily invest in new products. We are planning to introduce three new fully electric passenger vehicles by 2024. The debut of the first volume model, a mediumsized crossover, will be this year, and we are planning to introduce four new fully electric commercial vehicles by 2024. So, seven new EVs by 2024. We have established a dedicated business unit called Model e, responsible for successfully launching these vehicles. We are not only thinking about great products; we also know we need a transformation on the experience side. Electrification is undoubtedly one of

the key trends, but I think another one is connectivity. Here, we want to be creative and provide new solutions to our customers. The key objective is to scale electric vehicle production now, meaning we would like to sell more than 600,000 electric vehicles within the region by 2026.

There is an additional thing I would like to highlight concerning our region. In Hungary, I have to say that the pace of electrification is slow. If we look at last year’s figures, roughly 4% of vehicles were fully electric, so it’s a minimal amount. If I add the hybrid and the plug-in hybrids, we are in better shape because that accounts for 20% of the overall market. We see some movement there, but we will definitely need support from governments: to make these vehicles more affordable and to put in place a charging network in Hungary and the Czech Republic to help take away “range anxiety” from customers. These are areas where, with a little support, I think we could speed up the spread of electrification and make our life more sustainable. If you think about Norway, where 80% of the vehicles are already EVs, this all happened very fast. And it’s because the support programs were there from the government.

BBJ: Regarding the charging infrastructure, where do Hungary and the Czech Republic compare with the rest of Europe?

AK-L: It’s always a good question; ‘What comes first?’ Do we need the charging network in place to speed up sales? Or should we first increase sales and then develop the charging, as that creates a business case to invest? I think the manufacturers are doing our part. I would really encourage the government to do theirs as well. It’s hard to find exact figures on the number of charging stations, but for superfast chargers per 100 km of road, the EU average is around five. And if you look at where we are in Hungary, it is very much at the end of the rankings, with four charging stations. The U.K. has 19. It, the Netherlands and Germany might distort the averages with their high figures, but the key for me is that we are very much at the other end of the ranking. Czech is in a little better shape; it’s at the European average.

BBJ: Is there anything specific you want the Hungarian government to do?

AK-L: I read a survey from Ernst and Young, which was done last year: 50% of the customers they asked said they would change their vehicle to a hybrid or an EV at their next purchase. This is great because what you need is a demand market. And it seems that more customers are conscious about a sustainable future. Where we need support is although EV prices are coming down, the technology is still expensive. Any help from the government could really move the needle here to generate more sales. Of course, the other

ROBIN

Andrea Kővágó-Laky

thing is the charging infrastructure. Although the range of EVs is getting longer, many customers are just not buying because of this “range anxiety.” We could take this away or reduce it if we had a denser charging station infrastructure.

BBJ: Are you optimistic that there is an understanding that these challenges need to be overcome?

AK-L: I am. In terms of future models, the range is getting longer. The technology is developing, and the cost is coming down, so EVs will become more affordable for ordinary customers. Not immediately. It’s not a quick change, but with these tendencies plus a developing infrastructure, I think it will improve over time. In terms of the legislation, there is already an endpoint. By 2035, we have to become fully electrified and carbon neutral. There is no choice;

we have to get there. And the sooner we take the first steps, in terms of speeding up in this area, the easier it will be. To leave the targets to the last minute would make it very challenging. So, we are doing our part and, yeah, it would be nice if the government could also support us. I always try to highlight best practices: in Norway, the support was there, and the speed of EV sales was really fast.

BBJ: One of Ford’s most storied brands, Mustang, has made its electric debut. Does that help boost sales or at least raise awareness?

AK-L: Absolutely. I think it was a super important step to have done that with one of our most iconic passenger vehicles, the Mustang. And we also did it with the F-150 Lightning truck. It was crucial to demonstrate that this can be done with passenger vehicles, commercial

vehicles, and trucks, even on such iconic models. We wanted to be the first movers, so I think it was a good decision by the company.

BBJ: In 2014, when you were managing director “just” of Hungary, you were the Manager of the Year of the Hungarian Association of Executives. Do you view part of what you do as being a role model for other women?

AK-L: Those were very different times. The market was growing, and the economic conditions were excellent. I had an experienced team, a strong dealer body, we had leadership within the market and so on. That enabled me to focus on much more than the business. I was raised with a spirit to help others and was very much focused on CSR activities. I regularly attended or was a conference keynote speaker and belonged to many female clubs.

The Manager of the Year award helped me become more visible and be a role model. I’m proud I was the first female to receive this award in Hungary.

I would love to continue these efforts at a certain level, and I’m still trying to support them. But given I’m responsible for two countries at this stage, I just don’t have the time. What I am doing regularly is mentoring; I had two mentees last year within the company and one from outside. That’s ongoing. We have an initiative globally called Women of Ford and are doing a lot to support our colleagues in becoming leaders, even if they are women and mothers. We kicked off a leadership course in Hungary for female colleagues and are also working to create an infrastructure that can support women to progress in their careers, for example, during summertime when, for mothers with small kids, it’s a challenge to sort out the 10-week vacation.

Open Access Simulator Added at Bay Zoltán Research Center

Hungary’s Bay Zoltán Research Center says it is now offering open access to one of the world’s most advanced “driver-in-the-loop” (DIL) simulators. Ansible Motion’s award-winning S3 series simulator is now available at the everexpanding ZalaZone automotive R&D park.

BENCE GAÁL

The machine will benefit the research center’s growing number of research projects. But it will also be available for external engineers and companies working on autonomous driving, human factors, driver assistance, vehicle dynamics, so-called vehicle-to-everything (V2X) projects, and electrification technologies.

The high-fidelity DIL simulator laboratory is of a level that has previously been the sole preserve of vehicle manufacturers and the largest Tier 1 suppliers. It will enable vehicle modeling, scenario generation, and environment simulation for passenger cars, commercial vehicles, and motorsport applications, with options for customers to have bespoke cabins for a fully immersive experience.

The simulator will further enhance the role of both the research center and ZalaZone, already key contributors to Hungary’s automotive industry, which makes up some one-fifth of the country’s exports. Thanks to its

location and relative proximity to the Austria, Slovenian, and Croatian borders, ZalaZone says it offers a convenient venue that includes a world-class proving ground that is attracting many European automotive manufacturers and suppliers.

“The automotive industry is advancing rapidly towards a digital transformation, having full systems designed and validated in simulated environments,” says site manager Márk Lelkes. “To promote digital twin development and complement our existing experience at Bay Zoltán, we invested in this highly sophisticated DIL simulator. For both our current and future requirements and the stringent demands of our customers, Ansible Motion’s Delta series S3 simulator was the perfect match.”

Launched in 2022, Ansible Motion says the Delta series S3 is the most sophisticated, high-performance, dynamic motion driving simulator for both road and motorsport applications. The appeal of a fully integrated virtual environment that provides everything needed to engage real people convincingly with the automotive product development process

has led multiple OEMs, Tier 1s, and research organizations to acquire these simulators, making it Ansible Motion’s most successful product to date.

“Bay Zoltán Research Center is a gateway to virtual product development, and it brings versatility and performance to key sectors of the automotive

industry,” says Kia Cammaerts, technical director and founder of Ansible Motion.

“Staffed by a knowledgeable and experienced team, Bay Zoltán’s facility delivers flexible, turnkey access to world-leading simulation tools that are drawing interest from Europe and beyond. It’s a privilege to be involved with this truly world-class center for automotive development.”

The Delta series S3 simulator features an open and modular architecture that is software agnostic, allowing it to operate seamlessly with virtually every automotive software package a customer would need. Examples include Hexagon VTD (for environment and traffic scenarios), Cosworth Pi Toolbox (for telemetry and data analysis), AVL VSM (vehicle modeling), and AVL Model.Connect (model integration and co-simulation).

Project partner AVL provided vital engineering services and software stacks that directly support use cases ranging from advanced driver-assistance systems and autonomous developments to highperformance vehicle dynamics and chassis development work. Projects from these fields have already been tested at the facility, which is now operational.

Making a Lonely Case for Hungary’s Natural Strengths

An American expat businessman says Hungary is missing out on a golden opportunity to develop an industry of the future (and a future-proof industry) built on its natural strengths.

ROBIN MARSHALL

Eric Sievers is the investments director at ClonBio Group Ltd., the Irish familyowned holding company that is the parent of Pannonia Bio Zrt., which operates Europe’s largest biorefinery at Dunaföldvár.

Pannonia Bio was a principal sponsor at the Budapest Climate Summit at the end of 2022. Is there a perceived need to talk publicly about the story of the business and what it does? I wonder.

“We’re just talking to the strengths that Hungary has. And we are finding ways to bring those to regional and global markets,” says Sievers.

He says the business “is not in any way” connected to the idea of producing in Hungary for Hungarian consumption. “The size of our operations is disproportionate to the size of the Hungarian market. There’s no argument that the Hungarian market itself is important; it’s [just] not important for our business,” the investment director explains.

“We could, and we did for years, not sell anything in Hungary. We are an EU asset; we only exist in Hungary because of what is supposed to be the common market.”

In that sense, he says Pannonia Bio is similar to the car manufacturers and EV battery plants that have become mainstays of the Hungarian economy.

“Where we’re different is there’s no argument that the particular climate or people or natural resources of Hungary lead to the conclusion that this is where batteries or cars should be produced. That came about only because of a result of history, which is that Hungary for decades had extremely talented, productive workers whose salaries didn’t need to be very high. But according to the very development of that logic, that should go away. And it has gone away.”

Critical Thinkers

Sievers argues that critical thinkers in Hungary should ask themselves why cars and batteries are so essential to the country’s future. Going forward,

he believes issues like the price of energy will be much more important for those industries than labor costs.

“If you turn to our industry, which, in the big picture, is an agricultural processing industry, our argument for why we have a competitive advantage in Hungary, and why Hungary has a competitive advantage in the EU markets, is because Hungary has very productive farmland,” Sievers says.

“It [Hungary] produces a lot of stuff; it can produce a lot more stuff. Converting those raw agricultural products into food, feed, biomaterials, energy, and other things is something that Hungary can do so much better than Finland, or the Netherlands, or Germany. This is the competitive advantage of Hungary.”

“It produces a lot of stuff; it can produce a lot more stuff. Converting those raw agricultural products into food, feed, biomaterials, energy, and other things is something that Hungary can do so much better than Finland, or the Netherlands, or Germany. This is the competitive advantage of Hungary.”

Sievers contends that Hungary’s economic policies don’t reflect the country’s competitive advantage.

“It’s not in solar power production; it’s not in assembling cars. We would have expected a lot more industry in Hungary to develop along the lines of what we’re doing. And already Hungary is the superpower in, for example, ethanol. It produces much more ethanol per capita than any other country in Europe. In fact, it’s the third largest producer per capita in the world behind only the United States and Brazil.”

It is, in other words, one of the very few areas in the world where Hungary can say it is undisputedly a global leader.

While Sievers accepts that “it’s good for our business that we’re the people who figured this out,” he is puzzled that others, apparently, have not.

Knowledge Economy

“Hungry no longer has a large pool of unemployed skilled workers just to be had for the taking. Going forward the next 10 years or 20 years and 30 years, what will make the Hungarian economy competitive at the EU level and ensure that people have an increasing standard of living?” he asks. That said, he does acknowledge that the knowledge economy is a strength.

“Budapest, in some ways, is a better place than Madrid; the average 20-year-old here actually speaks English better than the average 20-year-old in Madrid. The pure knowledge economy, service sector stuff, Hungary can do. But 50 kilometers outside of Budapest or 300 kilometers outside of Budapest,

what will people be doing that’s relevant to the EU economy or the global economy?”

Sievers argues that Hungarian society and business should have a much better understanding of how Fit for 55 impacts the country and how that can connect to a discussion about what Hungary’s inherent strengths are, its comparative advantage.

He claims that the only area where something close to that has happened in Hungary is around solar.

“We invest in solar; we have 43 solar plants. And they’re great investments. But an individual investment isn’t the same as a sectoral focus. Hungary can’t argue that it’s a uniquely good place to produce solar power.” He thinks it is “remarkable” there isn’t a more nuanced conversation going on.

He makes the analogy that it is like a parent asking their kids what they want to do. When they say they want to be a fashion model, the response is, “Great, go be a fashion model,” instead of asking them what they think they are actually good at.

“That’s bizarre. We’re here because Hungary is the best place in the EU to produce ethanol. It’s the most costcompetitive place. We know why we’re here. And we were correct.”

Editor’s note: This article is taken from a wide-ranging interview conducted with Eric Sievers at Pannonia Bio’s headquarters. Much of the ground we covered concerned energy issues. That much larger section of the discussion will be included in our Forthcoming Top 50 Executives in the Energy Sector publication, due out at the end of February.

Eric Sievers, investments director at ClonBio Group Ltd.

Surányi: Hungary's Highest Inflation in the

fiscal and monetary policies have been fueling inflation, but Hungary is not in a financial crisis in the classical sense, though imbalances must be addressed for the sake of stability and sustainable economic development, according to György Surányi, professor of finance at Corvinus University, and a former governor of the National Bank of Hungary.

Lax fiscal and monetary policies in recent years have created unsustainable growth and helped propel Hungary to the unenviable position at the top of the European Union’s inflation league. However, the reduction in foreign-currency debt and full employment means that Hungary is not in crisis, as Hungary could finance itself from the markets, albeit expensively, Surányi said.

Speaking to the foreign press on January 13, the day news was released that headline inflation in December hit 24.5% year-on-year, the highest figure since 1996, the former central banker said the origins of the current problem go back long before Russia’s war in Ukraine.

“Contrary to the declarations of the Hungarian government, the current problems and tensions do not originate from the sanctions [on Russia] or the war against Ukraine, but the deep roots of this development arise from as early as 2017,” he said.

It was in that year that the Hungarian government and the MNB decided to maintain easy conditions to boost growth (in the run-up to the 2018 elections), causing the economy to overheat.

This followed some years of ultra-low inflation when the central bank reduced the reference rate to -0.25%.

“Rightly so,” said Surányi, because this helped lending and, at least in theory, boost investment.

“But they kept this minus 0.25% reference rate from the beginning of 2017 up to the summer of 2021. During this period, the real rate of interest became, quarter by quarter, deeper in the red, in the negative. As inflation accelerated, so the negative rate of interest climbed to between 5-6%,” he noted. As a textbook example of how to induce inflation, this could hardly be bettered.

“If there is such a serious negative real rate of interest, no one will save money, and everyone will demand credit. As a result, the net demand generated by the monetary policy is definitely up in the sky,” Surányi argued, pointing to the data.

“The annual average credit growth between 2017 and 2021 increased to 16-18% per annum. This is obviously not sustainable, obviously overheats the economy, and obviously deteriorates the external account. On top of that, the central bank injected an enormous amount of liquidity into the system, the so-called ‘Credit for Growth’ scheme, and the growth bond issuance,” he said.

Justified Initially

Once again, the policies to boost credit were justified when introduced earlier, since credit had been contracting.

“Up to about 2017, this was justified [...] it was understandable if the central bank wanted to facilitate credit growth in the country. But, from the beginning of 2017, the inherent, organic credit growth had already reached 10% per annum, but they kept continuing the injection of central bank liquidity,” Surányi said.

The result has been the creation of “tremendous excess liquidity,” all made worse because much of the credit came with a fixed, zero interest rate for 10 and 15 years maturity, thus creating a dramatic, open, unhedged interest rate position,

which is currently responsible for a dramatic loss for the central bank and the public sector as a whole, he argued.

All this was compounded because having “foolishly” declared that the exchange had not played any role in influencing the current inflation and inflation expectations, the central bank neglected the forint’s decline against world currencies, thereby playing a “serious role” in accelerating inflation.

“This is a Hungarian innovation. I have never, ever heard of such stupidity in a small, open economy. Even a closed, big economy cannot allow themselves to declare that they are not interested in the exchange rate movements,” Surányi thundered.

Another critical factor inhibiting economic development during the past decade and more has been weak productivity growth.

“The average productivity growth in Hungary between 2010 and 2022 was not more than 1% annually,” Surányi noted. “Once an economy is operating at

1-1.2%

annual average productivity growth, and there is no excess labor supply involved, the sustainable economic growth cannot be more than 2-2.5%.”

True, the low-interest rates and cheap credit boosted economic growth from 2017 to 4.5-4.6% for three years, but this was merely transitory.

“It was not sustainable because this growth rate was roughly twice as fast as the potential growth rate of the Hungarian economy [given the low productivity trend],” he reasoned.

COVID Downturn

The onset of the Coronavirus pandemic in March 2020 brought a sudden economic downturn, with the knock-on effect of temporarily curbing inflation.

However, because of the fiscal and monetary policies up to that point, inflation had already grown to 4.7% at the beginning of January 2020, already well out of line with trends in the eurozone.

“The external shock of the pandemic suppressed inflation, but once the

economy [began to recover], inflation continued to increase. As a consequence, in summer 2021, there was no war, no energy price crisis, [yet] Hungarian inflation reached almost 6% per annum, whereas the European average within the monetary union was at 1.5-1.6%. So, there was not any externally driven inflation in the country. It was completely driven by domestic mismanagement,” Surányi said.

In parallel, the strongly positive trade and current account balances posted up to 2016 began to decline afterward, turning strongly negative last year due to the energy price surge.

Yet, for all the concerns and the need to address them, the economist – who was governor of the MNB during the postCommunist crisis years of the mid-1990s at the time the so-called Bokros economic stability package was enacted – says Hungary is not in a “near-crisis situation” because of the “relatively disciplined” macro-policy between 2009-2016 which brought the foreign-currency denominated net external debt of the country down to a “sustainable, solid” level.

“Back in 2009, the net external foreigncurrency-denominated debt stood at around 55-60% of GDP; today, it is down to about

15% of GDP. So, it’s a solid position, and it gives a relatively big room for aneuvering for the policymakers without threatening the external sustainability of the country,” Surányi reasoned.

Indeed, even if Hungary fails to access its European Union funding because of the rule of law concerns in the European Commission, Surányi believes this is “not a life and death type issue” since Hungary could borrow, at a price, on the capital markets. (A point of view where he agrees with Prime Minister Viktor Orbán.)

“Hungary is paying right now a 4% plus risk premium over the [German] Bund reference rate, which is extremely expensive. It is significantly higher than countries with similar credit ratings have to pay [….], but the private capital market is happy to finance it,” he pointed out.

Still, with all the negative economic tendencies needing attention, including core inflation at roughly four and a half to five times that in the eurozone, Surányi is not optimistic, certainly in the short term.

“In contrast to the expectation and declaration of the government, I do not see any chance of avoiding recession, at least for 2023,” he concluded.

EU is Largely Self-inflicted

Misguided

KESTER EDDY

György Surányi. Photo by János Marjai/MTI.

“Contrary to the declarations of the Hungarian government, the current problems and tensions do not originate from the sanctions [on Russia] or the war against Ukraine, but the deep roots of this development arise from as early as 2017.”

Is Russia's War in Ukraine the Start of World War III?

The conventional definition of a World War is that it involves the participation of multiple major powers in a global conflict. Yet, Les Nemethy writes, one increasingly hears that Russia’s invasion of Ukraine signals the outbreak of World War III.

Until recently, this seemed far-fetched. The war is asymmetric: if the United States can wear down the Russian military machine by channeling roughly 10% of its defense budget into a proxy war and does not have to mobilize a single combat soldier, that doesn’t sound like a World War.

Recently, a French intellectual by the name of Emmanuel Todd came up with an interesting claim: the Ukrainian war is a World War because it is existential for both Russia and the United States; hence, neither side can back down. I believe it is self-evident that the war is existential for Russia. Given that, I will focus on whether the war is also existential for America and, if so, whether it signals a World War.

Let us look at the evidence:

• While NATO allies seem solidly behind the United States, the developing world is not. Their response is much more ambiguous. Todd argues that if you take developing countries into account, roughly 70% of the world population is not on the American side. The war may serve to crystalize public opinion in the developing world against the States.

• Of greatest importance is perhaps China, more on the Russian side of the Ukrainian conflict than the American.

Russia and China share an interest in diminishing U.S. hegemony. Should the two join forces, they would represent a formidable alliance. Once again, the Ukrainian war has the potential to catalyze this process.

• Russian success in Ukraine may embolden China to attempt to take Taiwan and encourage other potential aggressors in the world, putting further pressure on American hegemony and sending a message that it is waning.

Finance Matters

• India has continued to purchase large amounts of Russian oil despite the American-imposed embargo, demonstrating that the soon-to-be-most populous country in the world is, at best, an ambivalent U.S. ally.

Dimensions of War

Today, there are so many more dimensions of war than purely military. Experts call it hybrid warfare, which includes:

• security hacks, cyberattacks, etc.;

• misinformation (used, for example, to rig elections);

• kompromat (obtaining compromising information to blackmail a politician or other influential figure);

• trade wars (embargo on products crossing borders); and

• financial warfare (freezing reserves, blocking access to platforms such as the Swift international banking system. Or even something seemingly innocuous, such as paying for oil in yuan or gold. This diminishes the U.S. dollar as the world’s reserve currency. This position has allowed the States the “exorbitant privilege” of printing trillions of dollars, where the world accepts paper in exchange for providing America with goods.

Saudi Arabia recently agreed to sell oil to the Chinese in yuan, weakening the dollar’s status.

In short, the Ukrainian war has unleashed a number of forces that serve to diminish U.S. global hegemony.

A Russian victory, or even just Russia keeping one or more of the four oblasts it recently occupied in Ukraine,

“In short, the Ukrainian war has unleashed a number of forces that serve to diminish U.S. global hegemony. A Russian victory, or even just Russia keeping one or more of the four oblasts it recently occupied in Ukraine, may serve to highlight the limits of American power and send a message that aggression can be rewarded.”

may serve to highlight the limits of American power and send a message that aggression can be rewarded.

Fortress America

So Todd is right in the sense that the war in Ukraine is existential to the United States because it may reduce U.S. global hegemony. However, if U.S. territory itself is not threatened, can this be an existential threat? As geopolitical analyst Peter Zeihan argues, the United States could retreat behind its own borders and recreate “fortress America,” which would be a disaster for much of the world, but not the States. In conclusion, the Ukraine War is an existential threat to U.S. global hegemony, but not to U.S. territorial integrity.

The other element of Todd’s thesis is that neither side can back down. While the war has the potential to escalate into a full-fledged nuclear Armageddon, so far, all sides have shown remarkable adeptness at keeping a lid on the conflict, confining it to Ukraine. In my opinion, it is likelier that this war will continue for some time as a localized conflict.

I do not rule out the addition of one or more similar disputes of a local nature.

The reality is that the world is becoming a much messier place. Combine the many facets of hybrid war (which do, in fact, touch U.S. territory) and localized conflicts such as Ukraine, and the likelier scenario is a continuation of this messy muddle; neither peace nor World War.

As one commentator aptly put it: if we are arguing about whether we are in World War III, how can there be a World War? If there really were a World War, you’d probably know it!

Les Nemethy is CEO of EuroPhoenix Financial Advisers Ltd. (www.europhoenix.com), a Central European corporate finance firm. He is a former World Banker, author of Business Exit Planning (www. businessexitplanningbook.com), and a previous president of the American Chamber of Commerce in Hungary.

A bi-weekly look at the corporate financial issues affecting the markets

Photo by Hi clicker / Shutterstock.com

3 Special Report

Fast Moving Consumer Goods

Price Sensitivity Remains Central in Online Shopping

One of the main drivers of GDP growth is internal consumption, or, more simply put, shopping. The more consumers spend, the happier companies are. Sadly, Hungarian growth outlooks for this year do not look very good. However, consumers are not a homogenous mass, and shopping habits may differ significantly based on income, and not least, age.

Before looking at online shopping trends, we should examine the financial situation of Hungarian households. One approach is given by the EU statistical office, Eurostat, with the indicator of equivalized disposable income. While it sounds complicated, it basically shows the total income of a household, after tax and other deductions, that is available for spending or saving.

For a more precise calculation, Eurostat divides this by the number of household members converted into equalized adults, and household members are made equivalent by weighting each according to their age, using the so-called modified OECD equivalence scale. This income is not expressed in currencies but in purchasing power standard, or PPS.

In January this year, Eurostat released its report on equivalized disposable income for 2021, when COVID lockdowns were still in place in several countries. The median amount per inhabitant in the EU was 18,019

PPS.

As expected, at the higher end were Luxembourg (32,132), the Netherlands (24,560), Austria (24,450), and Germany (23,401). With 9,982 PPS, Hungary ranked among the lowest in Europe, together with Romania (8,703), Bulgaria (9,375), and Greece (9,917).

In 2022, inflation started growing, and the war in Ukraine added to

Median Equivalized Disposable Income, 2021 (Purchasing Power Standard per Inhabitant)

Repackaged Sales

A similar trend is seen at online retailer eMAG. One of the product categories available online is repackaged products. These are items returned by customers and resold by eMAG at a lower price but with similar return and warranty conditions. And the lower price is attractive, as eMAG saw a 25% surge of sales in this category in the last 12 months compared to the previous year.

The most popular repackaged products at eMAG were mobile phones and washing machines, but PC peripherals such as mouses and loudspeakers also sold well. Besides these, the top 10 repackaged list included TV sets, smartwatches, kitchen appliances, refrigerators, notebooks and headphones.

A more extensive survey was conducted by eMAG together with the GKID market research company. The data was compiled in a period when the monthly inflation surpassed 20%,

Notes: (1) Poland provisional; (2) EFTA, candidate countries and Slovakia 2020; (3) Iceland 2018.

Source: Eurostat (dataset codec ilc_di03). Administrative boundaries: EuroGeographics; UN–FAO; Turkstat. Cartography: Eurostat – IMAGE, 01/2023.

the problems already mounting in EU countries, meaning that the PPS measured by Eurostat for 2021 must now be lower.

Fitch Ratings released its review on Hungary on January 20, maintaining the “BBB” sovereign rating but changing the outlook from “stable” to “negative.” Justifying its decision, the agency noted that “inflation is among the highest of all Fitch-rated sovereigns as price caps have proved ineffective and added to fiscal costs, while monetary policy transmission is being hampered by targeted mortgage interest rate caps.”

Decelerating Growth

While GDP growth was a decent 4.7% last year, Fitch expects it to slow to 0.4% in 2023. As for household consumption, it will be impacted by “elevated inflation, decreasing real wages, and low consumer sentiment.”

That “elevated inflation” Fitch expects to peak in the first quarter at around 25%, and it will not fall below 17.6% for the year. Good news and bad news are mixed in the Fitch forecast, with inflation “decreasing toward 6% y.o.y. by year-end, although commodity prices, domestic price caps and regulated utility prices add significant uncertainty. Nominal

wage growth will remain below but close to inflation, increasing the risk of a wage-price spiral.”

Surveys confirm that shopping habits dramatically changed during the past year. COVID lockdowns were good business for online stores since these were among the few channels for buying products. With the gradual lifting of the lockdowns, sellers were hoping that the online sale trends would keep their high pace and reopened offline stores would simply add to the revenues in

2022.

Unfortunately, the war in Ukraine quickly cooled down the optimism. Customers became worried and opted instead to save their money for “just in case” scenarios. The Christmas season raised sales, as was expected, but it did not generate the revenue spikes it had in previous years.

István Zabari, founder of lighting products web store lumenet.hu told financial portal penzcentrum.hu that the number of transactions is clearly dropping. Impulse shopping has basically disappeared, and even median-income customers are increasingly searching for cheaper products, Zabari said.

which means that this probably reflects stable shopping habits for the next few months.

Seven out of 10 online customers questioned said that their monthly income is sufficient, and they even have some spare money to spend, which allows them some additional spending on treats once or twice per month.

Only 20% of the respondents said they would probably reduce the number of online orders in 2023 to save money. Perhaps surprisingly, there is a narrow group that even plans to increase online orders this year. The reasons are many: some wish to save fuel, others find it helpful to compare prices, and some are just bored of going to bricks and mortar stores. The most active online shoppers are in the 30-yearold age group, who, on average, placed 27.2 orders in 2022.

However, some products are still sold mainly in offline stores: FMCG staples such as food, cleaning and washing products, which will also be purchased in traditional stores in 2023, according to the survey.

Among the reasons to prefer online shopping versus offline stores, prices again play an essential role. One-third responded that internet ordering allows shoppers to find cheaper options, and a similar percentage said it is better than spending money on fuel to shop in offline stores. Time, too, seems to be precious for online shoppers; 40% responded that using this channel allows them to reduce time shopping.

BALÁZS BARABÁS

Largest

2 aRena mall www.arenamall.hu

3 kÖki teRminÁl www.kokiterminal.hu

4 mammut bevÁsÁRló- és szóRakoztató kÖzpont www.mammut.hu

5 etele plaza https://eteleplaza.hu/

savoya paRk www.savoyapark.hu

CbRe kft.

1055 Budapest, Bajcsy-Zsilinszky út 78. (1) 374-3040 www.cbre.hu

CbRe kft.

1055 Budapest, Bajcsy-Zsilinszky út 78. (1) 374-3040 www.cbre.hu kÖki east end zrt.

1191 Budapest, Vak Bottyán utca 75. A–C. ép.

Cushman & Wakefield kft. 1055 Budapest, Deák Ferenc u. 5. (1) 266-1288, (1) 266-1289 www.cushmanwakefield.com

Futureal management kft. 1082 Budapest, Futó u. 47. (1) 266-2181 www.futurealgroup.com

66,000 A 180,000

58,000 7,000 200,000

56,000 A 105,000

55,000 A A

in

2 180 2,800

4 150 1,388 parking lots +334 P+R

7 330 1,200

Peek & Cloppenburg, Media Markt, Sports Direct, Zara, Zara Home, H&M, H&M Home, Bonami, Dutch Home, BOSS, Bershka, Pull & Bear, Stradivarius, Libri, Michael Kors, CCC, Humanic

Bijou Brigitte, Buono Bistro, Burger King, C&A, Cafe Frei, CCC, Costa Coffee, Deichmann, dm, Euronics, H&M, HÁDA, Hervis, KFC, KIK, Libri Könyvesbolt, Megafitness KÖKI, Müller, New Yorker, OBI, Orsay, PEPCO, Pirex Papír, Pizza Hut, Playersroom, REGIO JÁTÉK, RENO, RETRO JEANS, Sebastiano, Rossmann, Swarovski, Tally Weijl, Tamaris, TESCO, Triumph, Yves Rocher

Match, Hervis, Media Markt, Mammut Bowling, UPC, Posta, Cinema City, Mango, Spriengfield, Starbucks, Salamander, Humanic, Douglas, Deichmann, Promod, Marks and Spencer, McDonald’s, Benetton, Esprit, Libri, Alexandra, Okay Italia, Bershka, Butlers, Mammut Egészségközpont, Euromedic, Bio Sétány, Lite Wellness Club, Burger King, Nordsee

A 120 1,300 A

1087 Budapest, Kerepesi út 9. (1) 880-7010 info@arenamall.hu

1195 Budapest, Vak Bottyán út 75. A–C (1) 919-1300 info@kokiterminal.hu

1024 Budapest, Lövőház utca 2–6. (1) 345-8000 mammut@mammut.hu

1119 Budapest, Hadak útja 1. (70) 652-0000 info@futureal.hu

6

FoRum savoya park kft. 1117 Budapest, Hunyadi János út 19. 52,000 –120,000

1–2 80 2,500

Auchan, OBI, Möbelix, ALDI, Euronics, CCC, TEDI, KIK, Pepco, Deichmann, Fressnapf, DM, Rossmann, Sport Factory, BUDMIL, Vision Express, HADA, OTP, Raiffeisen, Pirex, Líra, Café Frei, Belfrit, Fitness 5, Funxional Gym, Triumph, Biohair, Brandt Virág

1117 Budapest, Hunyadi János út 19. (1) 887-1330 office@savoyapark.hu

7 Westend bevÁsÁRlókÖzpont www.westend.hu

Westend ingatlanhasznosító és Üzemeltető kft. 1062 Budapest, Váci út 1–3. (1) 374-6500 www.westend.hu

51,400 16,320 194,000

4 400 2,230

Adidas, Bamba Marha Burger, Bellozzo, Bershka, Bijou Brigitte, Buddha Original, Burger King, Cafe Frei, Calvin Klein Jeans, Calzedonia, CCC, Cinema City-4DX, Converse, Columbia, Crocs, Deichmann, Desigual, dm, Douglas, Ecco, eMAG, Foot Locker, Gant, GAS Jeans, G-Star Raw & Replay, Guess Accessories, Guess Jeans, H&M, Helly Hansen, Hervis, Hisztéria, Hugo Boss, Humanic, Inglot, Intimissimi, Intimissimi Uomo, iSTYLE, Kazar, KFC, Kreatív Hobby, L’Occitane en Provence, LEGO, Levi’s, Libri, Lindt, LUSH, MAC, Mango, Marionnaud, Massimo Dutti, McDonald’s, Media Markt, Mesopotamia, Nespresso, New Yorker, NIKE Budapest, Nordsee, Office Shoes, Ofotért, Okay Italia, Pandora, Parfois, Pirex Papír, Pizza Hut, Playersroom, PULL&BEAR, PUPA Milano, Retro Jeans, Rossmann, Salamander, Samsonite Store, Samsung Experience Store, Sizeer, Skechers, Sloggi, Sony, SPAR, Springfield, Starbucks, Stradivarius, Superdry, Swarovski, Tchibo, TEILOR, Tejmadár, Tefal, Tezenis, TGI Friday’s, The Body Shop, Thomas Breitling, Tisza Cipő, Tommy Hilfiger, Triumph, Under Armour, United Colors of Benetton, Vans, Vapiano, Vision Express, Westend Leroy, Wittchen, Women’secret, Yves Rocher, ZARA

1062 Budapest, Váci út 1–3. (1) 238-7777 info@westend.hu

8 luRdy hÁz bevÁsÁRló- és iRodaCentRum www.lurdyhaz.hu

9 allee bevÁsÁRlókÖzpont www.allee.hu

10 maRket CentRal FeRihegy www.marketcentral.hu

lurdy-ház kft. 1097 Budapest, Könyves Kálmán krt. 12–14. (1) 456-1200, (1) 456-1209 www.lurdyhaz.hu

multi hungary management kft. 1117 Budapest, Október huszonharmadika u. 8–10. (1) 279-3520 www.multi.eu

White star Real estate kft. 1124 Budapest, Csörsz utca 49–51. (1) 382-5100 www.whitestar-realestate.com

50,000 A A

46,600 7,000 118,000

44,260 –44,260

3 400 1,930

4 150 1,200

1 36 1,550

Aldi, Spar, Deichmann, CCC, Scitec Gold Fitness Center, dm, Rossmann, Boulder Academy, Pepco, KIK, Háda, Triumph, Frei Cafe, Mon Cremi, Alphazoo, KFC, McDonald’s, RealMe, Xiaomi, Barber Shop, Office Depot, Pizza Hut, Lurdy Rendezvényközpont, Lurdy Mozi, Líra

Interspar, Cinema City, H&M, Zara, Van Graaf, DM, Douglas, Libri, C&A, New Yorker, Stradivarius, Reserved, Deichmann, Salamander, Humanic, Jysk, Intersport, Nespresso, Life1 Fitness, BestByte, PadThai, Bellozzo, KFC, Planet Sushi, Leroy Étterem, Starbucks

Tesco, Praktiker, Intersport, C&A, H&M, Müller, DM, KIK, Deichmann, CCC, Pepco, Burger King, Jysk

1097 Budapest, Könyves Kálmán körút 12–14. (1) 456-1100 info@lurdyhaz.hu

1117 Budapest, Október huszonharmadika utca 8–10. (1) 279 3520 info@allee.hu

Vecsés, Fő

Media Markt, New Yorker, Pólus Mozi, Reserved, SportsDirect, Starbucks, Tesco

Campona bevÁsÁRló- és szóRakoztatókÖzpont www.campona.hu

1152 Budapest, Szentmihályi út 131. (1) 910-5914 polus@cpipg.com 12

Cpi hungary kft. 1138 Budapest, Dunavirág u. 2–6. (1) 225-6600 www.cpigroup.hu

41,000 –60,999

2 160 1,746

Reserved, H&M, NewYorker, C&A, Intimissimi/ Calzedonia, Libri, Douglas, Marionnaud, Cinema City, Tropicarium, Humanic, Deichmann, CCC, Regio Játék, Sinsay, Cropp, House, JYSK, Sportisimo, KIK, Pepco, Tedi, Rossmann, dm

1222 Budapest, Nagytétényi út 37–43. (1) 424-3000 info@campona.hu 13 duna plaza www.dunaplaza.hu

1133 Budapest, Váci út 110. 36,904 11,000 55,000

indotek gRoup

3 150 1,255

CCC, Cinema City, Deichmann, H&M, Humanic, Intersport, Libri, KFC, LC Waikiki, McDonald’s, Media Markt, Reserved, Spar, Starbucks

1138 Budapest, Váci út 178. (1) 465-1600 info@dunaplaza.hu

15 mom paRk bevÁsÁRlókÖzpont www.mompark.hu

16 shopmaRk bevÁsÁRlókÖzpont www.shopmark.hu

17 gobudamall

https://gobudamall.hu/

CitymaRket dunakeszi https://dunakeszi. citymarketgroup.hu/hu/

FaCility manageR, pRopeRty manageR, addRess, phone, Website

indotek gRoup 1133 Budapest, Váci út 110. 34,600 –75,039

iCon Real estate management kft. 31,000 19,300 53,400

atq property zrt. 1117 Budapest, Budafoki út 187–189. Roland szoboszlai szoboszlai.roland@azq.hu (70) 773-2690

25,800 A 30,500

magnum hungaria invest kft. 1032 Budapest, Bécsi út 154. 25,000 A A

nol. oF levels no. oF Retail units no. oF paRking spaCes

4 95 840

6 102 1,230

2 77 1,000

4 A 813

majoR tenants in 2022

Sinsay, C&A, Decathlon, Euronics, Hervis, H&M, Jysk, KFC, Müller, New Yorker, Reserved, Libri, Starbucks, Burger King

Spar, CCC, DM, Libri, Reserved, Müller, H&M, CINEMA MOM, Mohito, Butlers, Paulaner, Vapiano, Leroy, Spíler Buda, Gant, Karl Lagerfeld, Michael Kors, Furla, Liu Jo, Gerry Weber, Nubu, Helly Hansen

INTERSPAR, MEDIA MARKT, HERVIS, dm, Libri, Pepco, Deichmann, CCC, Reserved

Interspar, dm, GOBUDA Mozi, GOBUDA Fitness, Mohito, House, Pepco, Líra, MKB Bank, Erste Bank, OTP Bank, Stühmer, Frei Café, Szamos, Wellenstyen, Bijou Brigitte, Triumph, Yettel, Telekom, Optic World, HúsSzabósság, The Fishmonger, Yves Rocher, Schmuck Ékszer

1082 Budapest, Futó utca 37–45. (1) 977-7779 info@corvinplaza.hu

1123 Budapest, Alkotás utca 53. (1) 487-5501 info@mompark.hu

1191 Budapest, Üllői út 201. –ingatlan@diofaalapkezelo.hu

1032 Budapest, Bécsi út 154. (70) 659-1119 info@gobudamall.hu

18

Cpi hungary kft. 1138 Budapest, Dunavirág u. 2–6. (1) 225-6600 www.cpigroup.hu

21,600 A 22,350

2 20 572

Möbelix, Calzedonia, Deichmann, KIK, Pepco, Office Depot, Kangaboo, dm, WalterLand, Galaxy játék, Ecofamily, Nike, Sport Factory

2120 Dunakeszi, Nádas utca 8. (1) 225-6600 hungary@cpipg.com

19

sugÁR ÜzletkÖzpont www.sugar.hu

stop shop veszpRém www.stop-shop.com/hu/hu

székhely 2007 kft. 1025 Budapest, Palatinus utca 1. (1) 487-3746

19,540 –39,850

20

21 szeged plaza www.szegedplaza.hu

22 duna CenteR www.dunacenter.com

23 győR plaza www.gyorplaza.hu

CbRe kft. 1055 Budapest, Bajcsy-Zsilinszky út 78. (1) 374-3040 www.cbre.hu

17,733 A A

indotek gRoup 1133 Budapest, Váci út 110. 16,824 A A

indotek gRoup 1133 Budapest, Váci út 110. 16,375 400 42,429

indotek gRoup 1133 Budapest, Váci út 110. 16,082 186 20,159

24 koRzó bevÁsÁRlókÖzpont www.korzo.hu ses magyarország kft. 2060 Bicske, SPAR út www.ses-european.com

15,900 3,000 46,000

4 90 400

1 24 617

1 62 862

1 18 655

1 65 359

4 45 640

Sugár Mozi, Sugár Fitness, Spar, Libri, Háda, EURONICS, Vodafone, Telenor, Unicredit Bank, Telekom, Raiffeisen Bank, Galaxy Játékáruház, CIB Bank, dm, SUGÁR Játszóház, SUGÁR Bowling & Pub, Magyar Posta, Extreme Digital, BÁV, Ofotért

Interspar, Humanic, Takko, C&A, New Yorker, Fressnapf, dm, Intersport, Deichmann, KIK, Hervis, Pepco, Sinsay, Libri, House

Aldi, CCC, Cinema City, H&M, Libri, Pepco, Rossmann

ALDI, Brendon, Deichmann, DM, Intersport, Kik, Pepco, Sinsay

Auchan, CCC, Cinema City, Deichmann, BestByte, Pepco, KFC, Rossmann, Pizza Hut

SPAR, New Yorker, Best Byte, Humanic, Deichmann, Douglas, Sinsay, dm, Erste Bank, Libri, Roland, KIK, Pepco

1148 Budapest, Örs vezér tere 24. (1) 469-5359 sugar@sugar.hu

8200 Veszprém, Dornyai Béla utca 4. A –

6724 Szeged, Kossuth Lajos sugárút 119. (30) 551-1034 info@szegedplaza.hu

9025 Győr, Csipkegyári utca 11. (96) 314-746 info@dunacenter.com

9024 Győr, Vasvári Pál utca 1/A (1) 577-1100 info@gyorplaza.hu

4400 Nyíregyháza, Nagy Imre tér 1. (42) 799-111 korzo@korzo.hu

25 miskolC plaza www.miskolcplaza.hu

indotek gRoup 1133 Budapest, Váci út 110. 14,745 340 35,855

stop shop óbuda www.stop-shop.com/hu/hu CbRe kft. 1055 Budapest, Bajcsy-Zsilinszky út 78. (1) 374-3040 www.cbre.hu

2 85 420

C&A, CCC, Cinema City, Deichmann, H&M, Half Price, KFC, Libir, McDonald’s, Pizza Hut, Reserved

3525 Miskolc, Szentpáli út 2–6. (1) 577-1100 info@miskolcplaza.hu 26

14,266 A A

CitymaRket soRoksÁR https://soroksar.citymarketgroup. hu/hu/ Cpi hungary kft. 1138 Budapest, Dunavirág u. 2–6. (1) 225-6600 www.cpigroup.hu

CbRe kft.

12,000 –12,300

28

1055 Budapest, Bajcsy-Zsilinszky út 78. (1) 374-3040 www.cbre.hu

11,605 A A

29

2 22 405

Spar, Media Markt, C&A, Pearl Harbor restaurant & bowling, Mountex, Deichmann, dm, H&M, Fressnapf, Kangaboo, Libri

1032 Budapest, Bécsi út 136. A –27

2 9 424

Media Markt, Mountex, Brendon, Office Depot, Ecofamily, Líra, AzAlvásért, WalterLand, Gyerekcenter

1231 Budapest, Bevásárló utca 8. (1) 225-6600 hungary@cpipg.com

2 42 587

stop shop debReCen www.stop-shop.com/hu/hu CbRe kft. 1055 Budapest, Bajcsy-Zsilinszky út 78. (1) 374-3040 www.cbre.hu 11,242 A A 1 18 531 Müller, H&M, Kedvenc Szakáruház, Intersport, Kangaboo, Deichmann, New Yorker, Pepco, Takko, CCC, Sinsay 4031 Debrecen, Kishatár út 34/B A –

s-paRk kaposvÁR www.s-park-kaposvar.hu ses magyarország kft. 2060 Bicske, SPAR út www.ses-european.com 11,200 –A 1 10 563 INTERSPAR, dm, Hervis, Deichmann, McDonald's, KIK, Pepco 7400 Kaposvár, Árpád út 20. –info@sparkkaposvar.hu

Socialite

Celebrating Széchenyi Thermal Bath and Hungarian Spa Culture

The Széchenyi Thermal Bath has been voted among the best in Europe by the British newspaper website Mirror. co.uk. That accolade transported David Holzer back to the first time he encountered the famous building, and Hungarian spa culture on New Year’s Eve, 2014.

My friends and I had been invited to this country by a Hungarian we’d met at Burning Man, a surrealistic gathering held every year in the United States’ Black Rock Desert. We were here to help him celebrate his birthday on New Year’s Day. None of us had ever been to Budapest before so our generous host was determined to show us the best of the city of his birth. This mostly involved consuming enormous meals and copious amounts of booze. I fondly remember crawling

out of a restaurant on Gozsdu Udvar, a courtyard off Király utca, that combined Jewish and Italian cuisine to devasting effect and may have been called My Yiddische Mama Mia!

After a couple of days of this, our host decided we needed to detox and prepare for more revelry at Széchenyi Thermal Bath.

Fairytale 1st Impressions

As we walked across City Park through frosted trees and over the bridge that crosses the lake, which was frozen solid, under skies so blue they looked painted, Széchenyi appeared. I had no idea what I expected to see. But it certainly wasn’t a lemonish yellow cross between a Disney castle that had

seen slightly better days and a wedding cake someone had left out in the rain.

Széchenyi looks the way it does because it was designed in the Neo-Baroque style of the late 19th century. It was built after a character named Vilmos Zsigmondy spent 10 years between 1865 and 1875 drilling a hole beneath City Park to a depth of almost 1,000 meters to reach the thermal water that would supply the spa. Construction began in May 1909 and the spa opened in June 1913. A second thermal spring was discovered in 1938 and this provides a supply of 76ºC (168.8ºF) medicinal water from a depth of 1,246 meters.

Today, with 21 indoor and outdoor pools, Széchenyi is the biggest baths in Europe and the third largest in the world. It also offers

10

saunas and steam cabins and a wide range of medical and wellness services. Apart from being honored by the Mirror, it features regularly in lists of Europe’s best thermal baths. Responding to the latest accolade, Ildikó Szűts, CEO of Budapest Spas, the organization that manages the capital’s baths, told me, “It’s an honor to be included in this prestigious selection.”

But back to 2014, and once we were inside Széchenyi, it was like being in one of Mad King Ludwig of Bavaria’s castles except it smelled strongly of chlorine. But when we made it outside, that first view of bathers in the steaming waters beneath the bulbous spires of the strange castle (including lobster red people playing chess using a board placed on the side of the steps leading down to the water) was a revelation.

That New Year’s Eve, we stayed at Széchenyi until it got dark and the rising clouds of steam were illuminated by powerful floodlights. It was the most magical introduction to Hungarian thermal bath culture I could have wished for.

My partner, who I first met that New Year’s Day 2015, is a dedicated sauna aficionado. After eight years tagging along with her to baths all over Hungary, I’ve come to realize that they’re where you see Hungarians at their most, well, Hungarian. This is particularly the case at what are called “sauna seances,” which are offered at Széchenyi.

Sauna Seance

A sauna seance is a guided program of around 15 minutes led by a qualified sauna master and designed, according to the Széchenyi website, to “maximize and supplement the benefits of the sauna.” Personally, I think the purpose of a sauna seance is to be so peculiar and diverting you forget how insanely hot you are.

If you’re tempted to learn more about becoming a sauna master in Hungary, a good place to start is the Hungarian Sauna Association. A professional, non-profit organization made up of Hungarian sauna masters, this “actively participates in building the sauna master community, bringing together and representing the masters, and helping the professional development of the sauna master members.”

The best sauna masters create highly entertaining diversions. I’ve been in sauna seances where masters have encouraged us to smear strangesmelling unguents and even tomatoes and strawberries over our bodies to a soundtrack of Queen. At one sauna seance, a guy ate his tomato before he realized he was meant to rub it into his belly. Not me, honest.

My favorite sauna master ever is a dude we christened the Iceman. His schtick is to stride into the sauna with an bucket full of ice cubes, handfuls of which he then hurls at the ceiling. When the ice hits the hot air it becomes shockingly hot steam that burns when it comes into contact with your skin.

I don’t know if this is good for you but it’s definitely invigorating.

After a sauna seance with the Iceman, we would stumble out of the sauna happy, and relieved, to be alive.

Incidentally, Hungary’s Héviz thermal lake also features in the Mirror’s list.

I must confess I had no idea Héviz, not far from the western end of Lake Balaton, even existed. Apparently, it’s the largest swimmable thermal lake in the world with temperatures that reach 38ºC (100.4ºF) in summer. One to add to the list.

Thinking about training as a sauna master? Visit www. magyarszaunaegyesulet.hu. If you’re content to simply enjoy the labyrinthine delights of Széchenyi Thermal Bath, find out more at www.spasbudapest.com. When you visit Széchenyi, make sure to bring flip-flops and a robe along with your swimsuit.

Photos courtesy of Budapest Spas Plc.

India Takes World Centerstage With G20 Presidency

India assumed the presidency of G20 (the Group of 20 countries comprising 19 largest economies and the European Union) for 2023 from Indonesia on December 1, 2022. In accepting this responsibility, Prime Minister Narendra Modi said that India’s G20 presidency would be “inclusive, ambitious, decisive and action-oriented.’’

The G20 is an international forum which represents the world’s biggest economies encompassing both industrialized and developing nations. Its core mandate is to address the major challenges related to the global economy, developmental issues and financial architecture, such as international financial stability, climate change mitigation, and sustainable development.

Together, the G20 members represent 85% of global gross domestic product; 75% of international trade, and two thirds of the world population.

The Bali G20 Summit in November 2022 was held at a particularly difficult and uncertain moment in international politics and economics. The world has been subjected to huge instability and volatility over the last three years due to the COVID pandemic. The ongoing Russo-Ukrainian conflict has global implications through high inflation, shortages of food, fertilizers and energy, unsustainable debts, supply chain disruptions and more.

In addition, the challenges of climate change, terrorism, nuclear proliferation, achieving the Sustainable Development Goals (SDGs) and others continue to unsettle the global economy and community.

India emerged as a “leader, solution provider and consensus builder’’ at the Bali Summit. The shadow of the war in Ukraine loomed large. It was not possible to arrive at a mutually acceptable language on the conflict in several G20 meetings that preceded the Bali summit. India was able to act as a bridge between the sides on the issue. A compromise solution was achieved which reiterated the assertion by PM Modi to Russian President Vladimir Putin in Samarkand

on the sidelines of the Shanghai Cooperation Organization Summit that “today is not an era of war,’’ and that the solution to the conflict should be found through “dialogue and diplomacy.’’

The 19-page official declaration addressed the major challenges confronting the global economy and financial system.

In his remarks in the first session on Energy and Food Security, PM Modi clearly stated that the UN had failed to resolve the political and economic challenges afflicting the world. The failure of multilateral organizations means the significance of the G20 has increased. The prime minister exhorted the countries to evolve a new world order, as had been done after World War II.

Speaking on the need to make digital connectivity truly inclusive, PM Modi asserted that “digital transformation is the most remarkable change of our era. The proper use of digital technologies can become a force multiplier in the decades-long global fight against poverty. Digital solutions can also be helpful in the fight against climate change.’’

He asserted that India’s experience of the past few years has shown that if digital architecture is inclusive, it can bring about socio-economic transformation. He declared that the principle of “Data for development” will be an integral part of the overall theme of India’s “One Earth, One Family, One Future” presidency. He also stated that a “Lifestyle for Environment” (LiFE) campaign can make a big contribution to sustainable growth, and encouraged the global community to make sustainable lifestyle a mass movement.

During its presidency, India will aspire to deliver outcomes in areas of critical interest such as integrating the climate and development agenda, accelerating progress towards achieving the SDG 2030 mandate, furthering development cooperation, supporting small and marginal farmers, enhancing food security and nutrition, addressing global skill gaps, female empowerment, promotion of blue economy and coastal sustainability, digital health solutions, green hydrogen and techenabled learning.

Even before the start of its presidency, India organized a briefing for envoys of the G20, invitee countries and international organizations in the Andaman and Nicobar Islands on November 26. India has already organized several substantive first meetings including those for the finance and central bank deputies in Bengaluru; the G20 Development Working Group in Mumbai; and the Global Partnership for Financial Inclusion in Kolkata.

India has also emerged as a strong and clear voice of the “Global South.” It organized the “Voice of the Global South for Human-Centric Development’’ virtual summit on January 12-13, 2023. The theme was “Unity of Voice, Unity of Purpose.’’

It brought together 125 countries of the Global South to share their priorities across a whole range of issues. The initiative was inspired by PM Modi’s vision of Sabka Saath, Sabka Vikas, Sabka Vishwas, Sabka Prayas (“the support of everyone, development for everyone, trust of everyone with everyone’s efforts”). It was also underpinned by India’s philosophy of Vasudhaiva Kutumbakam (The World is One Family).

In his opening address, the prime minister declared that the voice of the Global South would be the voice of India, and the priorities of the developing countries will be India’s priorities.

PM Modi gave a call for 4Rs: “Respond, Recognize, Respect and Reform.”

He also announced a number of new initiatives by India. These include:

AarogyaMaitri: essential medical supplies will be provided to any developing country affected by natural disasters or humanitarian crisis;

Global South Center of Excellence: for research on development solutions to be implemented around the world;

Global South Science and Technology Initiative: to share expertise in areas such as space technology and nuclear energy.

There will also be a Global South Young Diplomats Forum and Global South Scholarships.

Several developing countries like Bangladesh, Egypt, Mauritius, Nigeria, Oman and the UAE have also been invited as “guest countries” by India to the G20 Summit in September this year.

PM Modi has declared that India will organize more than 200 G20 meetings in 55 different cities on 35 different themes around the country. Assuming charge of the G20 at this critical moment is a huge challenge. It is also a great opportunity.

The world is looking at India with hope and expectation to effectively deal with the turbulence from COVID, the RussoUkraine war, global economic downturn, and climate change. India is committed to reach out to all countries to ensure that “when the G20 meets in the holy land of Buddha and Gandhi, we will all agree to convey a strong message of peace to the world.’’

India will hand over the baton to Brazil at the end of November 2023. This is the first time that the troika of the current, past and future presidencies of G20 are all significant developing and emerging economies. This provides a unique opportunity to India, supported by Indonesia and Brazil, to make a significant contribution to peace, security, stability and prosperity in the world. India looks forward to its presidency of the G20 with determination and confidence.

ASHOK SAJJANHAR

The writer has served in the Indian Foreign Service for 30 years and is a former Indian Ambassador to Kazakhstan, Sweden and Latvia.

Prime Minister Narendra Modi

Chamber of Commerce Corner

This regular section of the Budapest Business Joutrnal features news and events from the various international chambers of business. For further information and to register, visit the website of the organizing chamber. If you have information for inclusion on this page, send an email in English to our editorial assistant, Annamária Bálint, at annamaria.balint@bbj.hu

BCCH CEO Dinner Returns

The British Chamber of Commerce will hold the first of its 2023 CEO Dinners, its longest-running marquee series, on February 28 at Párisi Udvar, where Martino Grazzi, managing director of GSK in Hungary, will be the guest of honor.

GSK is a previous long-time partner of the BCCH and recently re-joined. Grazzi will discuss the current trends and challenges affecting the pharmaceutical industry locally and globally. The chamber says the format of the event includes the now traditional luxurious three-course dinner with wine and welcome drinks while hearing from one of the industry’s foremost professional’s views on current developments. BCCH chairman Duncan Graham will make the opening remarks to the event.

February28,6-8p.m. • Registration from 5:30 • Venue: Párisi Udvar Hotel, Petőfi Sándor u. 2-4, Budapest, 1052 • Admission: Members HUF 25,000 (incl. VAT); non-members: HUF 35,000 (incl. VAT)

Swisscham Networking Café

Párisi Udvar is becoming something of a busy venue for chamber events. The SwissHungarian Chamber of Commerce will hold its Swisscham Networking Café at the hotel on the morning of February 8. An event with a similar title was held for the first time last year and is being brought back in 2023. The event will begin with short (two or three minutes) introductions of 10 Swisscham members (newly joined and long-time members) and continue with an informal discussion, allowing for valuable networking. Members who would like to use the opportunity to introduce themselves should indicate it when booking. February8,9:30-noon • Registration from 9 a.m. • (Booking deadline February 6)

• Venue: Párisi Udvar Hotel, Petőfi Sándor u. 2-4, Budapest, 1052 • Admission: Members free; non-members: HUF 10 000 / person (0% ÁFA) • (Participation is free for one person per member (company), HUF 5,000 (0% VAT) / person for additional participants)

Dutcham Winter Business Lunch

The Netherlands-Hungarian Chamber of Commerce will host its Dutcham Winter Business Lunch on February 21 at the Axis Café & Lounge. This is an informal event to network, build connections, and discuss business topics over a nice lunch. Simply join a table for an engaging discussion. February21,noon-2p.m. • Venue: Axis Café & Lounge, Crowne Plaza Budapest, Váci út 1-3, 1062).

• Admission for members: HUF 5,900 (+ VAT); non-members: HUF 7,900 (+ VAT). • The fee includes the threecourse daily business menu and mineral water.

Inclusive Leader Workshops

A couple of days later, Dutcham will hold the first of its Inclusive Leader workshops. Based on the chamber’s successful spring-summer series from last year,

these leadership and EQ workshops are designed for those who want to become more effective leaders, grow themselves and others, and contribute to outstanding business performance.

The events also provide excellent opportunities for self-development for newly appointed leaders or key talents in member organizations. The workshops offer development opportunities through experiencing and practicing behaviors in critical inclusive leadership and EQ areas.

The workshops are run on two four-hour Friday morning sessions in a small group of a maximum of 10 participants. Learning is practical and fun and happens through sharing and practicing real-life business situations. Skills practiced are immediately applicable on the job or outside work.

The workshops are facilitated by Andrea Bujdosó, Dutcham board member, executive advisor and coach.

Workshopdates: 1st occasion, February 24, 2nd occasion, March 24. • Both events run from 9 a.m.-noon, 09:00-12:00.

• The participation fee for the two occasions is HUF 69,900 (incl. VAT and catering). Only open to member companies.

• The language of the workshops is Hungarian or English based on the group’s composition and participants’ preferences.

Super Bowl LVII Watch Party

In line with its long-standing tradition, on the evening of February 12, AmCham Hungary will again organize its Super Bowl Watch Party to follow the game in real-time.

Super Bowl, which was first organized at the end of the 1960s, has grown into one of the most important sporting events. With around 100-110 million viewers worldwide each year, it is among the most-watched American television broadcasts. It has also become a cultural phenomenon, with some of the world’s most popular musical artists performing at the halftime show.

The AmCham watch party will take place on February 12 at a special location in the former Marionett Beer House, at Budapest Marriott Hotel and feature a special buffet including classic buffalo wings, pulled pork sandwich and football cookies. Participation requires prior registration.

February12,from11p.m. (game starts after midnight) • Venue: Former Marionett Beer House, Budapest Marriott Hotel, Apáczai Csere János u. 4, 1052 Budapest (entrance from the Vigadó tér) • Admission: Members only, HUF 15,000 + 8% service charge (including VAT) / person.

• Registration deadline February 3, 5 p.m.

Canadian Business Breakfast Series

The Canadian Chamber of Commerce in Hungary will hold the next session of its Business Breakfast Series, “Good Design – Good Business.” The topic is presented

by brand strategist David Robák and lead designer Levi Fignár, founders of the internationally awarded Next Ship, a brand strategy, design and communication business based in Budapest.

Standing out as a business has become incredibly difficult. What are the tools that business owners need to invest in to stay relevant? How do we stay on the surface of this ocean of information and navigate towards our goals? Can we catch the next ship towards the horizon? How does good design results in good business? Breakfast and coffee, business networking and a tour of Presidential Suite are included in the event.

February15,8:30-11a.m. • Venue: The Ritz Carlton Budapest, Erzsébet tér 9-10, 1051 Budapest • Admission: Members HUF 21,500 (incl. VAT), non-members HUF 26,500 (incl. VAT) • Parking not included in the fee.

Crisis-resistant Business Strategy Consultation

The German-Hungarian Chamber of Industry and Commerce is offering SME members the opportunity to attend an in-house event held by consulting experts of 3rdGEN on developing crisis-resistant business strategies and planning processes using the Canvas business model.

February8,9a.m.-12:15p.m. • Venue: Wirtschaft - House of German-Hungarian Economy, Lövőház u. 30, 1024 Budapest

• Admission: Members, free of charge; non-members: HUF 14,900 + VAT.

Breakfast With Minister Nagy

Business executives will have the opportunity to discuss pressing issues of the Hungarian and European economy such as inflation, the energy crisis and labor shortages during a Business Breakfast with Márton Nagy, Minister of Economic Development. He will present the government’s view on these topics and answer questions from the audience. With English-Hungarian simultaneous interpretation.

February14,9-11a.m. • Venue: Hotel Corinthia, Erzsébet krt. 43-49, 1073 Budapest • Admission: HUF 16,900 + VAT / person (includes breakfast)

Economic Outlook for Hungary 2023

The French-Hungarian Chamber of Commerce with its partners, Swisscham, the Swedish Chamber of Commerce, Belgabiz, Dutcham and the Joint Venture Association (JVSZ), hosted its year opening Business Lunch with Minister for Economic Development Márton Nagy, on January 24 at the Kempinski Hotel Corvinus Budapest.

After greetings from chamber president László Károlyi and Ágnes Ducrot, its director, the Minister Nagy presented his economic perspectives of Hungary for 2023.

He said the year holds many economic challenges; however, recession must be avoided and the government will maintain innovative economic policy to that end. He emphasized that Hungary’s economic growth remains export- and investment-driven, for which a new financing structure and a new energy, industry, and employment policy must be established.

The system of strategic sectors must also be reconsidered, and a stronger sectoral and territorial focus is needed. Priority sectors include the

automotive and battery production, the health and pharmaceutical, energy, and food industries, R&D and higher education, transport and logistics, telecommunications, tourism, electronics, the banking and insurance sectors, and military industry.

The conference, held in English, brought together numerous member companies of organizing chambers from diverse sectors as well as ambassadors of the represented countries.

Affordable Energy, Future Sources

The French chamber will be hosting its upcoming “Hot Topic” business breakfast with Dr. Barbara Botos, Ph.D, Ambassador-at-large for Climate at Ministry for Energy on the energy sources of the future, discussing “Affordable Energy and Energy Sources of the Future.”

March 7, 9-11:30 a.m. Registration from 8:30 a.m. • Venue: Kempinski Hotel Corvinus Budapest, Erzsébet tér 7-8, 1051 Budapest • Admission: Members HUF 25,000 + VAT; non-members HUF 37,500 + VAT.