Hungary: Growth outlook stays fragile – ING

ING economists Peter Virovacz and Zoltán Homolya say Hungary’s latest GDP data show the economy emerging from stagnation, but they stress that much of the recent strength reflects temporary pre-election factors. They project Hungarian GDP growth of 1.5% in 2026, with consumption as the main driver, modest investment and net exports weighing on overall expansion.

Temporary drivers support fragile recovery

"Hungary’s growth picked up in the first quarter, but much of the strength appears driven by temporary, pre-election factors rather than a clear, sustained recovery. Our latest economic growth forecast for 2026 projects a 1.5% increase. This generally gloomy outlook is partly due to the impact of the energy price shock, and partly due to the fading of the one-off factors seen in the first quarter."

"Based on the detailed data, the outlook for the Hungarian economy has not changed much. A number of specific positive factors are emerging that are behind the strong economic performance. Whether the surge in consumption proves sustainable depends on how long the 'honeymoon period' lasts."

"However, the review and temporary suspension of certain public investments by the previous administration could lead to a downturn in the short term, before investment activity begins to pick up towards the end of the year. Moreover, export growth may be limited by geopolitical uncertainty, rising production costs and potential supply chain issues due to the effective closure of the Strait."

"Based on year-on-year indices, domestic demand increased significantly in the first quarter of 2026, while exports continued to shrink and imports grew substantially. In other words, the structure of economic growth has not changed compared to recent quarters; it has simply become more imbalanced."

"Net exports alone slowed the economy’s year-on-year performance by 4.5ppt, a figure offset by a 6.2ppt contribution from domestic demand. Consumption and inventory accumulation provided nearly equal contributions as drivers of growth."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)