Economy 16 April 2025, 8:11am

Raiffeisen slashes 2025 GDP forecast for Hungary

Portfolio

The beginning of 2025 has not seen a positive economic turnaround in Hungary, says Raiffeisen Bank in its quarterly strategy paper, as the bank's analysts note that the same trends in the real economy that ended last year have continued into this year. The current US tariff regime (10% on EU products, 25% on cars) has a more negative impact on Hungarian growth than expected, given the importance of exports of cars and car parts, both directly and indirectly. As a result, Raiffeisen has lowered its forecast for Hungarian GDP growth in 2025 to 1.8% from 2.5%.

In early 2025, inflation was higher than expected, driven by the weak forint and food and service prices. The government has introduced anti-inflationary measures (margin cap on food products, cuts in bank and telecom fees). Raiffeisen expects inflation to average 4.1% in 2025, higher than the 3.7% forecast for 2024.

The forint remains vulnerable. On 11 April, Standard & Poor's revised Hungary's rating outlook to negative from stable, while maintaining its BBB- rating, citing Hungary's deteriorating growth prospects and fiscal uncertainties ahead of the 2026 elections.

The domestic equity market was the world's fifth best performer on a euro basis in the first quarter, boosted by hopes of a ceasefire in Ukraine and risk-seeking investor sentiment. The record close was also supported by positive corporate results, but

as we enter the second quarter, the uncertainty caused by Trump's tariff war has brought risk aversion to the fore, exacerbated by an expected slowdown in the domestic economic environment.

exacerbated by an expected slowdown in the Hungarian economic environment. Domestic companies are still not considered expensive by international standards, but this alone may not be enough to sustain the previous trend.

Cover image (for illustration purposes only): Getty Images