When the World War II started, Hungary did not want to join, but was forced to join the Third Reich before a brutal occupation from the Sovietics. the troops from Hungary were under the service of the Nazi´s Army. Most of the Hungarian Jews were deported and killed during the holocaust, and those who survived in the country, had an extreme restrictive norms on their lifes. One of the most important battles for Hungary during the World War II was the Battle of Budapest. Half a million troops from Soviet Army attacked the city in 1944, while Hitler said to hold out at all cost. 120.000 troops died, including Hungarian troops and 80% of the buildings of the city were destroyed. Germany lost the battle but, half a million of Hungarians were transported to Soviet labour camps, ending the war for Hungary but starting a horrible period.
The politics of Hungary started to take shape before the surrender of Germany. In 1944, UK and Stalin agreed that the Soviet Union will have a 75% of influence in the country, and UK 25%. At the end of 1944, a provisional goverment appeared made of communist members. This provisional communist goverment stayed had the power until the end of 1945. At the beginning of 1946, the Republic of Hungary was established and lasted until te middle of the following year when the politics in Hungary started to be very conflictive and unstable because the communist were always trying to obtain again the power. Finally, in 1947 Hungary was required to pay $200 million in reparations to the Soviet Union, $50 million to Czechoslovakia, and $50 million to Yugoslavia. Hungary also gave a piece of its own territory to Czechoslovakia, leaving Hungary with a less territory than it had after the Treaty of Trianon. During 1950s, most of the Jewish middle class were victim to the antireligious policies of the communist goverment and lots of entrepreneurs or merchants were deprived of their private property and moved to the countryside.
Knowing that Hungary was a battlefield during the World War Two, it had several economic consequences for the country. The biggest losses were from the agriculture, manufacturing economy and transport. The GDP fell by 40% based on 1938 prices. At the end of the war and as said before, Hungary was forced to pay 300 millions of compensation to Soviet Union, yugoslavia and Czechoslovakia. The economy of Hungary at this point was terrible, an it became worse because of the arising inflation, decreasing highly the level of production of the firms, generating an unstable budget and an excessive goverment spending due to post-war reconstruction. To stop the massive inflation and the enormous arising power of the black market, in 1946, a new currency was introduced, called the "Forint". The new currency made a financial stabilization based mainly on domestic resources and foreign borrowing by the goverment. This policy succeed maintaining stable the prices and stocks markets, leading the country to a recovery.
The economy immediatly after the end of the WWII, was controlled by the private sector but the economic policy was strongly defined by the state intervention in the economy. A big change occured in the agriculture area, where lot of people received a part of the land to let them start farming by themselves for the first time. This policy made an increase in the amount of farmers and the importancy of the agricultural sector.
In 1947, a three year plan was applied based on the post-war reconstruction. The plan created a big amount of output, more than it was planned, so it helped to develop the damaged industry area. The transport that was one of the most damaged sectors, in 1949 it started to recover thanks to the plan.
However, as expected, the foreign trade economy radically changed from Germany to Soviet Union as the main partner, drastically reducing the economic relations with other countries
The politics of Hungary started to take shape before the surrender of Germany. In 1944, UK and Stalin agreed that the Soviet Union will have a 75% of influence in the country, and UK 25%. At the end of 1944, a provisional goverment appeared made of communist members. This provisional communist goverment stayed had the power until the end of 1945. At the beginning of 1946, the Republic of Hungary was established and lasted until te middle of the following year when the politics in Hungary started to be very conflictive and unstable because the communist were always trying to obtain again the power. Finally, in 1947 Hungary was required to pay $200 million in reparations to the Soviet Union, $50 million to Czechoslovakia, and $50 million to Yugoslavia. Hungary also gave a piece of its own territory to Czechoslovakia, leaving Hungary with a less territory than it had after the Treaty of Trianon. During 1950s, most of the Jewish middle class were victim to the antireligious policies of the communist goverment and lots of entrepreneurs or merchants were deprived of their private property and moved to the countryside.
Knowing that Hungary was a battlefield during the World War Two, it had several economic consequences for the country. The biggest losses were from the agriculture, manufacturing economy and transport. The GDP fell by 40% based on 1938 prices. At the end of the war and as said before, Hungary was forced to pay 300 millions of compensation to Soviet Union, yugoslavia and Czechoslovakia. The economy of Hungary at this point was terrible, an it became worse because of the arising inflation, decreasing highly the level of production of the firms, generating an unstable budget and an excessive goverment spending due to post-war reconstruction. To stop the massive inflation and the enormous arising power of the black market, in 1946, a new currency was introduced, called the "Forint". The new currency made a financial stabilization based mainly on domestic resources and foreign borrowing by the goverment. This policy succeed maintaining stable the prices and stocks markets, leading the country to a recovery.
The economy immediatly after the end of the WWII, was controlled by the private sector but the economic policy was strongly defined by the state intervention in the economy. A big change occured in the agriculture area, where lot of people received a part of the land to let them start farming by themselves for the first time. This policy made an increase in the amount of farmers and the importancy of the agricultural sector.
In 1947, a three year plan was applied based on the post-war reconstruction. The plan created a big amount of output, more than it was planned, so it helped to develop the damaged industry area. The transport that was one of the most damaged sectors, in 1949 it started to recover thanks to the plan.
However, as expected, the foreign trade economy radically changed from Germany to Soviet Union as the main partner, drastically reducing the economic relations with other countries
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