By Brian Toohey

Despite a Hungarian economic recession that possibly will persist into 1993, U.S. exports to Hungary should top the 1991 level of $256 million. As the Hungarian economy increasingly engages with the West, American investors will respond and push the volume of investment past the present level of near $1.5 billion.

U.S. exports 1991--$256 million U.S. imports 1991--$367 million

Hungary remains in recession as it attempts to restructure its economy. Industrial production shrank almost 10 percent in 1991 and should shrink another 8 percent in 1992. Unemployment reached an unprecedented 6 percent in 1992, and inflation topped 30 percent.

The economy should rebound by 1993 when the now-burgeoning private sector becomes a dominant force. Meanwhile, the Hungarian government projects that in 1992 privatization will gather steam and inflation will subside, and the forint will be made fully convertible by 1994.

U.S. exports to Hungary shot up 64 percent in 1991, mostly due to deliveries of U.S. commercial aircraft to the state airline Malev. Apart from aircraft, U.S. exports rose 6 percent. Analytical instruments and telecommunications equipment both performed well, nearly doubling 1990 export levels.

With high Hungarian demand for U.S. products, the export picture for the coming year looks bright. The best prospects include equipment for food processing and packaging, telecommunications, health care, computers and peripherals, as well as consumer goods. Already this year, two American companies won separate contracts for computer equipment totaling nearly $1 million. On the investment side, major recent deals have boosted total U.S. investment to near $1.5 billion, leaving the United States the leading foreign investor.

U.S. government and multilateral assistance programs will remain key in supporting U.S.-Hungarian business in 1992. The U.S. Export-Import Bank offers loans, loan guarantees, and export credit insurance, and the Overseas Private Investment Corporation (OPIC) offers financing and political risk insurance. The Hungarian-American Enterprise Fund, which provides financing to help develop the Hungarian private sector, currently has disbursed more than $25 million in direct investments and loans. The World Bank is currently funding development projects for the health care, energy, transportation, and financial sectors. The European Bank for Reconstruction and Development (EBRD) is now fully established, and supports infrastructure development projects as well as private joint ventures in Hungary.

The Commerce Department is sponsoring a number of trade promotion events to be held in Hungary during the coming year. Pavilions have been established for U.S. firms at the IFABO Computer Fair (April 27-30) and the Budapest Spring Fair (May 20-27).

For further information on Commerce trade promotion events or trade and investment opportunities in Hungary, contact the Eastern Europe Business Information Center at (202) 482-2645.

Source: International Trade Administration, Business America Magazine