Despite encouraging data in manufacturing, retail, and construction in the fourth quarter, Hungary’s economic challenges persist, with experts debating whether the country can pull out of its recession by year’s end.
Fresh projections from the Hungarian National Bank (MNB) show GDP growth in 2025 reaching just 3%, while inflation estimates have been adjusted upward. After Hungary’s third-quarter GDP data confirmed the economy’s slide into recession, MNB revised its 2024 growth outlook to a modest 0.3-0.7%, a notable drop from its earlier estimate of 1.0-1.8%, according to Portfolio.hu.
Six months ago, MNB’s forecasts painted a much brighter picture, predicting 2-3% economic expansion for this year. Fast forward to 2025, and while the bank initially anticipated a growth range of 2.7-3.7%, it now expects slightly lower numbers, between 2.6-3.6%. By comparison, the government’s official projection for 2025 stands at 3.4%. However, MNB remains cautiously optimistic, suggesting a strong recovery could begin in the latter half of 2025.
On the inflation front, things are heating up. The bank now expects inflation to climb to 3.3-4.1% next year, up from its September forecast of 2.7-3.6%. Central Bank Governor Barnabás Virág pointed to a weaker forint and new government tax measures as key drivers of this uptick during a recent press briefing.
Meanwhile, construction activity showed a glimmer of hope. Data from October revealed a 4.6% increase compared to September, marking a slight rebound from months of decline since May. While the improvement is small and mainly tied to “other buildings” (a term often linked to state-funded infrastructure projects), it adds to a mix of positive signs.
When combined with growth in manufacturing and retail trade, these developments have sparked cautious optimism that Hungary could leave its recession behind by late 2024. Still, much will depend on how the economy weathers ongoing challenges.
