German and Hungarian leaders meet for discussion on economic cooperation
German Chancellor Angela Merkel will visit Budapest today to meet with Hungarian Prime Minister Viktor Orban to discuss economic cooperation.
Under the Orban government, Hungary has attempted to diversify its commercial links so it is less dependent on the European Union. Nevertheless, intra-EU trade accounts for 81% of Hungarian exports, with the largest share of 28% going to Germany.
Likewise, German companies value their economic relationship with Hungary. According to an annual survey conducted by the German-Hungarian Chamber of Commerce—an organisation representing the business interests of more than 900 member companies from Germany and Hungary—84% of its members would reinvest in German or Hungarian assets. The latest data reveals that German trade with Hungary exceeded $28 billion in 2017.
Political relations between the two countries pose the biggest threat to this economic partnership. Chancellor Merkel and PM Orban share opposite opinions on the efficacy of the EU—the latter a notable eurosceptic. Short-term progress on political issues—like Mr Orban’s Fidesz party backing close Merkel ally Ursula von der Leyden for European Commission president—will likely be outweighed by differing views on the future of political union in Europe.
If political tensions do sour, this may benefit Hungary’s plan to diversify who it trades with. Hungary may look east to Romania—currently its second largest trade partner—or even more east to Russia as an alternative primary trade partner.
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