Hungary's economy grew at nearly five percent this year – one of the fastest rates in the European Union. 

A spike in construction and expansion in the industrial sectors helped drive growth. But there are fears this won't be repeated in 2020 due to a global slowdown. 

Budapest also faces a major challenge from the EU over its immigration policies, which have sparked controversy across the continent and divided Hungarians.

Economic growth

External factors were key in the country's economic growth this year.

"Global tendencies supported the fast growth," says Andras Vertes, chairman of GKI Economic Research. "The other important element is that Hungary is getting very significant funding from the EU."

Most of Hungary's trade and inward investment comes from within the European Union. Outside of the bloc, China is now Hungary's largest trade partner: Hungary is the top destination for Chinese investment in Central and Eastern Europe.

But next year the country is unlikely to experience the same economic boom.

"The world economy is slowing down," warns Vertes. "Less funding will arrive from the EU and wages can't grow every year by 10 percent. This will result in Hungarian GDP growth dropping from five to three percent."

Relations with the European Union

Prime Minister Viktor Orban has led Hungary for almost a decade as a self-declared defender of Europe. He has been an inspiration for some people across the continent, as nationalism has gathered momentum in recent years. 

In the run-up to European elections this year, he ran a vicious campaign against the EU, waging war against the institution over how it handled the migration crisis. 

But Hungary could lose out enormously in the EU's next seven-year budget.

The current plan includes cutting down on the multibillion Euro cohesion fund, which is aimed at reducing regional economic and social disparities - a move Hungary opposes.

Orban argues that the new proposal would reduce cohesion. "The poorer nations will get less and the richer nations will get more. This is not fair," he insists. 

For the 2019 European Parliament elections, Orban wanted "anti-immigration forces" to become a majority in all European Union institutions, including Parliament and the European Commission.

His ruling Fidesz party won 13 of the country's 21 seats in the European Union parliament, one seat more than in the 2014 vote.

The Democratic Coalition led by former Socialist Prime Minister Ferenc Gyurcsany secured four seats, while the Liberal Momentum Movement won two seats.

Hungary's political relations with the European Union, though, continued to be strained this year. 

The membership of Orban's Fidesz party in the EPP was temporarily suspended in March before the EU elections due to alleged violations of the rule of law.

The new president of the European People's Party Donald Tusk said the status of Orban's populist party within the influential group will be decided early next year.

Tusk, the former European Council president, said the decision will be made in January after the EPP's internal investigation.

The migration crisis

Orban has been at the frontline of the refugee crisis in Europe in recent years. Although most migrants and refugees were just passing through his country, the nationalist Orban took measures to keep them out. He won a third consecutive term in April 2018 with an electoral campaign based on anti-immigration policies. 

In 2015, at the height of the migration crisis, Hungary built razor-wire fences on its southern borders to stem or divert the flow of people, many from the Middle East and Asia, making their way to Western Europe.

In recent weeks, the number of migrants found near the border in Hungary and expelled back to Serbia through gates in the fences has been on the rise, according to Hungarian police.

Asylum-seekers may file their claims at two transit zones along the border, but recent legal changes allow authorities to reject the vast majority of the claims of those arriving from Serbia.

Orban has made migration the central issue of his government since 2015 and says it will remain the most important question in Europe for years to come.

"Everyone who read the intelligence reports knows that the migrant flood is not over. This is a threat that lives with us and we constantly have to expect the migrant push to grow," Orban says.

He is especially opposed to immigration by Muslims and has said this year that Hungary and Europe need to protect their Christian culture.

Speaking at a conference about the persecution of Christians last month, Orban said Christianity in Europe was under threat from a number of sources.

Before razor wire-topped fences were built in 2015, nine thousand refugees were entering Hungary every day. Today, increased border security have limited that number to about two dozen.

Even so, Hungary, as well as the Czech Republic and Poland, refuse to agree to a bloc-wide quota system for resettling migrants.

EU nations agreed in 2015 to relocate 160,000 refugees from Italy and Greece as the countries buckled under the arrival of hundreds of thousands of migrants.

According to the UN, the number of asylum seekers and migrants is once again on the rise. And if Hungary continues to block Brussels from forming a resettlement program, it could be at risk of losing EU funding in the new year.

Since returning to power in 2010, Orban has greatly increased the state's role in society while gaining control over large parts of the media, passing laws meant to stifle leading independent NGOs and placing allies at the head of nominally independent institutions like the state audit office and the chief prosecutor's office.

But this year, cooperation has been increasing among the opposition parties, in response to Orban's policies. 

His efforts to build an "illiberal state" are seen by critics, including, in some instances, by the European Union, as a threat to the rule of law and democracy.

Press freedom

The Hungarian government has achieved a degree of media control unprecedented in an EU member state, seven international organizations said in a statement released this month. 

The organizations urged the EU "to take all available measures to respond.”

The report said that the Hungarian government has systematically dismantled media independence and used verbal attacks, lawsuits and other means to harass critical journalists.

While journalists are at less risk of the physical violence or imprisonment common in autocratic regimes elsewhere, the Hungarian government has pursued a strategy to silence the press with the forcible closure or government takeover of the once-independent media, and the delegitimization of journalists. 

"The construction of a pro-government media empire serves as a vast propaganda machine for the government of Orban, insulating large parts of the public from access to critical news and information so as to maintain the Fidesz party's hold on power," the joint statement claims.