Hungary’s economic forecast for 2025 projects a modest annual GDP growth of only 0.8%, reflecting ongoing challenges within the country’s economic landscape. The forint, Hungary’s national currency, has appeared relatively stable, having hovered between 400 and 405 against the euro. Looking ahead, the short-term picture isn’t so clear-cut—with opposing forces at work both on inflation and on the real economy.
Other indicators nevertheless point in the direction of potential disinflation in Hungary. Given these factors, we expect the country’s headline inflation rate to remain elevated, staying above 4% until the end of the year. As of May, overall inflation was 4.4% YoY and core inflation at 4.4% YoY. All three of these figures represent a drop from the beginning of the year. They remain well above the central bank’s long-run tolerance range, underscoring persistent economic stress.
In reaction to the goal of driving up prices, Hungary has introduced administrative price-ceiling measures. While these initiatives go a long way towards offsetting inflationary pressures, they have not yet fully realized in substantial economic benefits. As Hungarians are well aware, their country’s economy is in the dumpster. These facts, combined with the reality of slow growth and productivity challenges, are toying with the nation’s fiscal situation.
Analysts note that Hungary’s inflation is much higher than its European counterparts. They further highlight chronic productivity problems, suggesting that in the medium-term the forint will continue to depreciate against the euro. The currency’s consistent devaluation could further complicate Hungary’s economic recovery efforts.
Industry insiders are sanguine about new production capacities coming on stream in short order. This major investment is likely to play a major role in Hungary’s positive macroeconomic growth trajectory in 2026. Investments and exports are expected to make a modest comeback over this short period, which will help relieve some of the current economic stresses. These positive movements won’t be realized in their entirety until well after 2025.
As of the third quarter of 2024, Hungary’s current policy rate has not changed from 6.50%. This new stable rate is a testament to the central bank’s measured approach in balancing the complicated economic landscape. Keeping the rate at this level would take the edge off inflation while allowing for some room to accommodate other necessary economic shifts.