World Economy

Hungary Hit Hard by Russian Embargo

Hungary Hit Hard by Russian EmbargoHungary Hit Hard by Russian Embargo

The Hungarian economy was badly hurt by the European Union’s sanctions against Russia, but the government wants local companies to be ready for the time when the embargo is lifted, the ministerial commissioner to oversee measures that are related to the Russian embargo told public television M1 on Wednesday morning, Portfolio reported.

Gyula Budai said Hungary’s exports to Russia dropped 14.5% year-on-year in the fourth quarter of 2014 and plunged 52% yr/yr in the first quarter of this year. Losses of the Hungarian agriculture amount to about €80 million ($90 billion), he added.

He noted that damages from lost investments can only be estimated at this point. Budai reminded that Russia’s biggest food retailer, Magnit, was planning (in late 2013) to set up a logistics center in Hungary, but the plans fell through.

Magnit was to set up a transport company in Zahony, a major border crossing to Ukraine in eastern Hungary, creating around 1,500 jobs. The company, which was to have a fleet of 1,000 trucks and would have transported foodstuff from European Union member states including Hungary to the retailer’s shops in Russia, called off the project in August 2014 because of Russia’s embargo on imports of a range of farm products from the EU.

Budai also said Russian authorities constantly monitor companies that had already been present in the country therefore these could return to the market immediately after the lifting of the embargo, which could be a first-mover advantage for them.

The Hungarian government has kept an eye on the local market to make sure it does not become subject to dumping attacks. It has also been seeking new sales opportunities in the western Balkans, the Far East and Turkey, and has managed to achieve strong export growth an all of these markets, he added.