Hungary: Growth strengthens but structural limits remain - ING

ING economists Peter Virovacz and Zoltán Homolya see Hungary on a gradual but constrained growth path after Gross Domestic Product (GDP) rose 0.5% QoQ and 1.7% YoY in the second quarter. ING forecasts 1.7% growth in 2026, led mainly by consumption, while weak investment, net exports and structural demographic and capital-stock constraints remain key headwinds.

Resilient growth facing structural limits

"Based on the detailed data, the short-term outlook for the Hungarian economy has not changed significantly. The overall picture remains fundamentally positive. Further growth in consumption may be supported by the dynamic rise in real disposable income and the surge in consumer confidence."

"However, we can take some comfort from the fact that the decline in investment is partly due to the review and suspension of projects initiated by the previous government, so it may be only temporary. Meanwhile, investment activity could see a sharp rise towards the end of the year as a result of the drawn-down of EU funds. Export growth may be constrained by geopolitical uncertainties, rising production costs and potential supply disruptions, the signs of which are not yet evident in the second-quarter statistics."

"Our latest economic growth forecast for 2026 projects a 1.7% increase. Throughout the year, consumption is likely to drive the Hungarian economy, while investment may show modest growth in the second half if EU funding boosts year-end investment statistics. However, net exports could significantly dampen GDP growth, given the developments seen in the first half of the year and the expected negative impact of the nuclear energy crisis on the trade balance in the third quarter."

"Further ahead, in 2027–2028, a continued strengthening of domestic demand and an eventual pickup in external demand could lead to GDP growth of around 3.0%. However, the nearly four-year-long stagnation in capital stock and the deteriorating demographic situation make it increasingly unlikely that the Hungarian economy will be able to sustain growth above 3% without suffering a significant loss of internal and/or external balance in the long run."

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