Doing business gets harder in Hungary

Competition

The World Bank puts Hungary in 48th place among 190 economies in its latest Ease of Doing Business ranking. Hungary places beneath Poland (27th), the Czech Republic (30th) and Slovakia (39th). It has slipped from 42nd place in the previous ranking.

As described on the World Bank website, a high ranking in terms of ease of doing business means the regulatory environment is more conducive to the launch and operation of a local firm. The rankings for all economies are benchmarked to June 2017.

According to the list, Russia (35th), Kazakhstan (36th), Moldova (44th) and Romania (45th) also perform better in this area than Hungary.

In a ranking according to doing business topics, Hungary placed 79th for starting a business, 90th for dealing with construction permits, 110th for getting electricity, 29th for registering property, 29th for getting credit, and 108th for protecting minority investors. The country ranked 93rd in the paying taxes topic, 1st in trading across borders, 13th in enforcing contracts, and 62nd in resolving insolvency.

A 0-100 measure of where Hungary stands in terms of the best performance observed across all economies in the Doing Business sample since 2005 showed 72.39 in the World Bank report. The so-called "distance to frontier" measure was 87.60 for starting a business, 67.93 for dealing with construction permits, 63.26 for getting electricity, 80.09 for registering property, 75.00 for getting credit, 50.00 for protecting minority investors, 71.49 for paying taxes, 100.00 for trading across borders, 73.75 for enforcing contracts, and 54.75 for resolving insolvency. The distance to frontier measures showed the biggest improvements for starting a business, enforcing contracts and resolving insolvency.

In a statement issued after the release of the Doing Business report, and cited by national news agency MTI, the Ministry for National Economy noted that even though Hungary had slipped in the overall ranking, the countryʼs performance "in absolute terms", as gauged by the distance to frontier measure, improved from 72.13 last year.

"These divergent movements show well the shortfalls of such rankings, as they differ from each other on evaluations and gauge competitiveness with different methodology," said the ministry. "For this reason, the government continues to consider the primary gauge of the competitiveness of the Hungarian economy to be the dynamic rate of economic growth, expanding investments, the more than 740,000 jobs created since 2010, the balanced budget and falling state debt," it added.

The ministry asserted that a number of measures to improve competitiveness approved by lawmakers in Parliamentʼs spring session would show up only in next yearʼs Doing Business report.

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