Hungary - Domestic policy

Medgyessy will need to put his economic savvy to good use in Hungary. The economy is faltering and the growth Hungary experienced in the late 1990s was compromised in 2002–03 by the global economic slowdown and a decline in Hungary's international competitiveness. The government faces a high budget deficit, and its GDP rose by only 3.3% in the first half of 2002, down from 6.6% in the first half of 2000. Foreign direct investment has also slowed.

However, Hungary is fast on the way to achieving one of its long-term goals: European Union (EU) membership. In December 2002, the EU formally invited Hungary, along with nine other countries, to become a full member of the body in 2004. Hungary has had one of the highest levels of support for accession among candidate countries, with 77% of the population expressing support for EU membership in December 2002. However, that number sank to 56% in January 2003. Hungary must amend its constitution to cede part of its legislative authority to the EU, and Medgyessy needs the support of the opposition to amend the constitution. After several months of preparation, the government launched a $9 million campaign in February 2003 to raise public support for EU membership ahead of the referendum held on the issue on 12 April.

Although only 45.6% of eligible voters decided to cast their votes, Hungarians by a very wide margin—83.7%— voted "yes" to EU membership on 12 April 2003. Medgyessy called the vote "historic," and a fireworks display was held in Budapest to Beethoven's "Ode to Joy" and the EU's national anthem.