Economic Indicators Report: Pick Yo's Expansion into Hungary

This report provides an overview of Hungary's economic environment for Pick Yo, a Kuwaiti frozen yogurt company, considering expansion. It assesses key economic indicators such as GDP, per capita GDP, the Big Mac Index, main imports and exports, inflation rate, interest rate, exchange rate, and real GDP growth. The analysis suggests a favorable business environment in Hungary, characterized by a stable economy, increasing standard of living, relatively cheaper goods, moderate inflation, low borrowing costs, and a progressing economy. The report concludes that Hungary presents a viable market for Pick Yo's expansion, offering opportunities for both domestic sales and export earnings.

Running head: BUSINESS RESEARCH
Business Research
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1BUSINESS RESEARCH
Table of Contents
Business Overview.....................................................................................................................2
Economic Indicators...................................................................................................................2
Gross Domestic Product (GDP) in $US per annum...............................................................2
GDP per capita in $US per annum.........................................................................................2
Big Mac Index........................................................................................................................2
Main Imports..........................................................................................................................3
Main Exports..........................................................................................................................3
Inflation rate %.......................................................................................................................3
Interest rate %(Prime Lending Rate)......................................................................................4
Exchange rate (1KD = HUF).................................................................................................4
Annual GDP Growth Rate Actual (%)...................................................................................4
References and Bibliography.....................................................................................................5

2BUSINESS RESEARCH
Business Overview
PICK YO is a Kuwaiti Company offering healthy frozen Yogurt. The company
provides yogurt to the kitchen that is fresh and non-fat (pick.com.kw 2019). The company is
currently considering expansion to Hungary. Before expanding to a new location, the
company owner need to evaluate the economic and business environment of the targeted
nation. The chosen economic indicators for this purpose include GDP, per capita GDP, Big
Mac Index, Main Imports, Main Exports, Inflation, Interest rate, exchange rate and real GDP
growth.
Economic Indicators
Gross Domestic Product (GDP) in $US per annum
The Gross Domestic Product (GDP) in $US is $139.2 billion. Gross Domestic
Product is a primary measure capturing market value of all produced final goods and services
in a nation (Goodwin et al. 2015). The measure helps to understand aggregate productivity of
a nation. Higher GDP implies a stable state of the economy and hence, is help for business
expansion.
https://www.cia.gov/library/publications/resources/the-world-factbook/geos/hu.html
GDP per capita in $US per annum
Per capita GDP in $US per annum for Hungary is estimated to be $29, 600. This s
obtained by dividing GDP by population and gives an idea regarding standard of living of the
nation. Per capita GDP in Hungary constitutes an increasing trends implying improvement in
average standard of living generating a higher demand for business.
https://www.cia.gov/library/publications/resources/the-world-factbook/geos/hu.html
Big Mac Index

3BUSINESS RESEARCH
The latest data as revealed by the Economists show that cost of a Big Mac sandwich
in the fast food chain of McDonald is HUF 862 as against USD 3.43. This implies that
Hungarian Forint is undervalued by 2.5 percent as against US dollar. The big mac index
implies goods are relatively cheaper in Hungary. This will again help to boost the business
demand.
Main Imports
The main imports of Hungary include machinery and equipment, manufactures, fuel
and electricity, raw materials and food product. As food products are one of the primary
imports in Hungary, Pick Yo will get an opportunity to expand its business in Hungary.
https://www.cia.gov/library/publications/resources/the-world-factbook/geos/hu.html
Main Exports
The main exports of Hungary include machinery and equipment, manufactures, food
products, fuels and electricity and raw materials. Food products are again one of the primary
exports of Hungary. The company therefore will get the opportunity to make considerable
export earnings.
https://www.cia.gov/library/publications/resources/the-world-factbook/geos/hu.html
Inflation rate %
The annual inflation rate in Hungary recorded to be 2.4%. Inflation rate in a nation is
defined as a phenomenon of sustained increase in the general price level (Goodwin et al.
2015). The purchasing price of currency varies with inflation rate. The inflation rate is
moderate in the nation indicating stable state of price level and hence, stability in purchasing
power indicating a favorable business environment.
https://www.cia.gov/library/publications/resources/the-world-factbook/geos/hu.html

4BUSINESS RESEARCH
Interest rate %(Prime Lending Rate)
The commercial bank’s annual prime lending rate for Hungary is 1.48%. This refers
to the rate that business and individual have to pay in return of bank loan (Heijdra 2017). The
lending rate helps to understand cost of credit to the business. Interest rate is below 3 percent
meaning borrowing cost is relatively low. The company therefore can borrow fund at a
relatively cheaper rate affecting the business in a positive way.
https://www.cia.gov/library/publications/resources/the-world-factbook/geos/hu.html
Exchange rate (1KD = HUF)
The recent exchange rate between Kuwait Diner (KD) and Hungarian Forint (HUF) is
given as 1 KD = 915.089 HUF. Exchange rate is a representative measure of one country’s
currency relative to other (Heijdra 2017). The exchange rate shows 1 unit of Kuwait Diner is
equivalent to 915.085 Hungarian Forint. This implies it is relatively cheaper for the company
to purchase necessary inputs in Hungary than that in Kuwait. This will have a favorable effect
on business.
https://www.xe.com/currencyconverter/convert/?Amount=1&From=KWD&To=HUF
Annual GDP Growth Rate Actual (%)
The annual real GDP growth rate in Hungary is 4%. The real GDP growth rate is an
inflation adjusted measure for GDP growth and hence, reflects actual GDP growth rate
(Goodwin et al. 2015). The real GDP growth rate in Hungary shows an increasing trend. The
average growth rate of 4% indicates the economy is progressing at a faster rate influencing
business in a positive manner.
https://www.cia.gov/library/publications/resources/the-world-factbook/geos/hu.html

5BUSINESS RESEARCH
References and Bibliography
bbj.hu 2019. Forint only slightly undervalued, based on Big Mac index. [online] Budapest
Business Journal. Available at: https://bbj.hu/finance/forint-only-slightly-undervalued-based-
on-big-mac-index_144291 [Accessed 4 Mar. 2019].
cia.gov 2019. Europe :: Hungary — The World Factbook - Central Intelligence Agency.
[online] Cia.gov. Available at: https://www.cia.gov/library/publications/resources/the-world-
factbook/geos/hu.html [Accessed 4 Mar. 2019].
Goodwin, N., Harris, J.M., Nelson, J.A., Roach, B. and Torras, M., 2015. Macroeconomics in
context. Routledge.
Heijdra, B.J., 2017. Foundations of modern macroeconomics. Oxford university press.
pick.com.kw 2019. PICK » PICK. [online] Pick.com.kw. Available at: http://pick.com.kw/
[Accessed 4 Mar. 2019].
xe.com 2019. XE: Convert KWD/HUF. Kuwait Dinar to Hungary Forint. [online] Xe.com.
Available at: https://www.xe.com/currencyconverter/convert/?
Amount=1&From=KWD&To=HUF [Accessed 4 Mar. 2019].