INSTANT VIEW - Some analysts trim 2026 GDP growth estimates for Hungary following anaemic 2025

In the fourth quarter of last year, the Hungarian economy grew by 0.2% compared to Q3. Analysts had initially expected growth of 0.4%, so the result fell short of expectations. Total performance for 2025 was a modest 0.3% growth, lower than the anaemic GDP growth in 2024.

The Hungarian economy has not grown for three and a half years, with the Central Statistical Office (KSH) measuring a decline in eight of the last 14 quarters, stagnation in one quarter, and growth in only five quarters. The second half of 2025 consists of a stagnant quarter and the modest 0.2% increase announced today, showing no signs of dynamism in the Hungarian economy.

ING lowers growth estimate for this year

Although expectations were not particularly high, the latest GDP data failed to deliver any positive surprises, commented Péter Virovácz, senior economist at ING Bank in Budapest. "Ramped up government spending has not made a meaningful contribution to the economy s overall performance," he added. He is still hoping for significant growth this year, but downside risks are growing, and

ING has cut its 2026 growth forecast to 1.9% from 2.3%.

Virovácz pointed out that while economic activity saw improvement rather than stagnation, the zigzag pattern continued: a stronger quarter was followed by a weaker one, and vice versa. "This time, we experienced the downside. In contrast, several of the economies covered by my colleagues surprised to the upside (e.g. eurozone, Germany, Netherlands, Spain, Italy), leaving Hungary as a clear underperformer."

Based on seasonally and calendar-adjusted data, the year-on-year growth rate of the Hungarian economy slowed in the fourth quarter compared to the third quarter, which was not expected by many. While the raw data does show some acceleration, this is due to the effect of more working days, the analyst added.

The factors behind the economy s generally weak performance will be highlighted in the second estimate, due on 3 March. Regarding the drivers based on the final use of GDP, Virovácz believes that consumption was the main force in the fourth quarter once again. This was partially offset by the continued negative contribution of investments and net exports, he noted.

In light of the fourth quarter data, ING is revising its 2026 Hungarian GDP growth forecast downward. "Slower-than-expected growth in the fourth quarter means the carry-over effect will also be weaker this year, at just 0.3%. In other words, if the economy were to stagnate in each quarter of this year, total economic growth in 2026 would be only 0.3%. However, government intervention is much more likely to generate intra-year growth, particularly in the first quarter, meaning that full-year GDP growth will realistically exceed the carry-over effect," said Virovácz.

"Consumption may be the driving force this year, primarily due to new fiscal stimuli. However, this has yet to stimulate economic growth. The biggest question remains how much of the surplus income will enter the real economy and how much expanding consumption will generate imports, which would partially offset the positive effects of consumption," said Virovácz.

He does not expect any significant changes to investment. "In a favourable scenario, investment activity could stop declining and grow by between 0 and 1%. Meanwhile, strong import demand driven by consumption, coupled with some recovery in investment and weak external demand, suggests that net exports will negatively impact economic growth this year."

Erste: no meaningful improvement even at the end of last year

With detailed data set to be published on 3 March, the initial commentary of the KSH remains characteristically brief, highlighting that services—particularly financial and insurance activities and retail trade— along with construction contributed positively to growth, while the contraction in industry continued to exert a significant drag on overall economic performance, commented Orsolya Nyeste, senior economist at Erste Bank in Budapest.

These remarks suggest that the upcoming detailed breakdown is unlikely to bring major surprises.

"The expansion in services points to household consumption remaining the primary driver of growth, while the ongoing weakness in industry likely continued to weigh on exports, limiting any potential improvement. From a forward‑looking standpoint, the key question is whether investment activity showed any sign of recovery toward the end of the year," she said.

Taken together, the muted quarterly dynamics indicate that

the economy failed to gain meaningful momentum in late 2025. This subdued performance implies weaker carry‑over effects into 2026, shaping a more restrained growth outlook for the year ahead.

Looking forward, Erste expects the Hungarian economy to gradually emerge from its prolonged stagnation in 2026, supported by an anticipated improvement in external demand and a more favourable European business cycle. However, the fact that improving German data have so far translated only minimally into domestic indicators is a notable downside concern. The weaker technical carry‑over also underscores this risk.

Overall, we forecast GDP growth of 2% for FY 2026, though the balance of risks remains tilted to the downside, given the lack of momentum at the end of last year.

Gránit Fund Management: industry cannot expand despite significant subsidies

The Hungarian economy continues to grow at a low rate. Although there is no recession, there is still no meaningful growth, summarised Gábor Regős, chief economist at Gránit. While the Central Statistical Office (KSH) has not yet published detailed data in its preliminary estimate, it is evident that the poor performance of the manufacturing sector continues to hinder growth. The low growth of the German economy and the lack of demand play a role in this, but internal factors such as high energy prices and low demand for existing car manufacturers' products should not be forgotten either.

This is also problematic because industry has been and remains at the center of economic policy objectives, and despite significant subsidies, the sector is unable to expand.

Based on raw data, GDP in 2025 increased by 0.4% compared to the previous year, while adjusted data show growth of just 0.3%. This is significantly below the European Union average, as well as being lower than other countries in the region. While Germany was pleased with its 0.2% growth, which meant that its economy was no longer in recession, Hungary's growth of 0.3–0.4% is quite weak, especially compared to the expectations formulated a year ago and included in the Budget Act.

There are several reasons why we are lagging behind our regional competitors. Perhaps the most important of these are the lack of significant EU funding, agricultural difficulties (such as foot-and-mouth disease), underperforming industry in the region (with a greater focus on vehicle manufacturing and a weaker performance of brands present in Hungary), a more open and dependent economy, and higher financing costs resulting from high public debt.

"We still expect growth of 2.0–2.5% this year," Regős concluded. This will be driven by the low agricultural base, the start-up of new factories, the expected stronger growth of the German economy — although growth expectations here have already begun to moderate — and expanding consumption due to rising disposable income, he concluded.

We hope that when we write a similar summary in a year's time, we will not be disappointed.

MBH: a surprisingly good performance by the construction industry

The KSH announcement came as no surprise in terms of which sectors contributed to growth; on the production side, services made the most positive contribution to growth, wrote Ádám Rodic, an analyst at MBH.

As expected, the financial, insurance and commercial sectors performed the best. The positive performance of the construction industry was somewhat surprising on the production side, requiring strong construction activity in December after a decline in November. However, it is not surprising that poor industrial performance was the main drag on the economy. Detailed data will be released on 3 March, providing a clearer picture of how each sector performed in the fourth quarter.

Due to the carry-over effects of GDP growth in Q4 of 2025, Rodic anticipates downside risks to GDP growth prospects for 2026, potentially amounting to a few tenths of a percentage point. This is primarily due to weak industrial exports; however, it does not significantly impact household income as there has been no substantial negative reaction in the labour market and government transfers are substantial. Combined with rising consumption, this may worsen the external balance, although probably not dramatically.

Capital Economics: Poland continues to outperform, Hungary is lagging behind

GDP figures out of Central Europe this morning show that Poland’s recovery gathered pace, while Hungary lagged behind.

We think that growth will pick up across the region this year, although Poland seems likely to remain an outperformer,

commented Nicholas Farr.

Annual 2025 GDP data for Poland showed that its economy expanded by 3.6% last year (consensus: 3.5%), which Capital Economics estimate is consistent with growth picking up from 0.9% q/q in Q3 to 1.3-1.5% q/q last quarter. Performances elsewhere were weaker. GDP growth in Czechia slowed a touch from 0.8% q/q (+2.8% y/y) in Q3 to +0.5% q/q (+2.4% y/y) in Q4, which was close to the consensus (+2.5% y/y). Meanwhile, Hungary’s economy grew by just 0.2% in q/q, which meant that y/y growth came in at 0.7% in Q4 (consensus: 0.8%).

The breakdown for Poland showed that a rebound in investment helped to drive the pickup in growth last year, which was supported by the unlocking of EU funds, Farr said. He noted what although the other releases do not contain detailed breakdowns, the press release in Hungary noted that “economic performance was slowed down mostly by a fall in industry”.

"We think activity across the region will be supported over the coming quarters by a modest strengthening in export demand as GDP growth in Germany picks up. With interest rates close to neutral levels in Poland and Czechia, monetary conditions will also be more supportive than previously. Loose fiscal policy will be another factor supporting Poland too," said Farr.

Today’s data won’t be a game-changer for upcoming central bank decisions, but there has been a dovish shift among policymakers across the region recently. At the margin, the struggles in the Hungarian economy could give policymakers a stronger argument to cut interest rates in the coming months.

Cover image (for illustration purposes only)forrása: Getty Images