Hungary’s economy is teetering on a tightrope of uncertainty, with the return of Donald Trump’s administration only adding to the complexity, according to Ákos Péter Bod, former governor of Hungary’s National Bank.
Speaking on a podcast for Portfolio.hu, Bod tackled the impact of rising tariffs, global instability, and the Hungarian government’s economic strategy—or lack thereof.
Bod started with a sharp critique of the new administration’s tariff policies. “What we know is that the U.S. tariff level, which is still relatively low compared to competitors, has started climbing. The first Trump administration pushed for this, and the current one is doubling down with economic policies rooted in higher tariffs,” he explained.
These escalating trade barriers, paired with the ongoing war in Ukraine, create a climate of intense uncertainty for global decision-makers. Bod highlighted the visible fallout: delayed investments, halted projects, and rushed shipments—all driven by concerns over where customs duties might ultimately land. “This is a very fragile situation,” he remarked.
While some optimists believe the Trump administration could bolster Hungarian growth, Bod remains skeptical, aligning with analysts who argue that rising uncertainty acts as a drag on progress.
Hungary’s heavy reliance on an open economy came under fire in Bod’s analysis. “We hear about Hungary being an open economy—it’s practically a cliché. But the reality is, we import heavily while producing for export. If the German car industry struggles, so do we. If electric vehicles spread slowly, we feel the pinch,” he stated.
Bod criticized Hungary’s failure to develop its internal market, noting that other countries like Estonia, Poland, and Romania—once trailing behind—have leapfrogged Hungary in GDP per capita. “High exports mean high imports too, and that’s come at the cost of added value in Hungary’s own GDP,” he said.
Adding insult to injury, these nations haven’t faced EU funding freezes like Hungary. Poland, for instance, saw its budget unfrozen after Donald Tusk’s rise to power, while Hungary remains mired in EU scrutiny.
Bod dismissed the Hungarian government’s reliance on massive foreign investments as an economic cure-all. “The growth promised for 2023 didn’t happen. The same for 2024. Now, here we are, entering another year, and it’s still unclear what could spark the high growth being promised,” he argued.
He emphasized that a few major projects simply can’t deliver the far-reaching economic boost the government expects. “The large investments mentioned don’t have the acceleration effect they’re banking on,” he warned.
Hungary’s stance on labor migration is another thorny issue. The government has pledged to curb the influx of foreign workers, but Bod painted a different picture. “Economic migrants, brought in by companies, are already vital to agriculture, industry, and services. If you’ve seen a pizza delivery driver, visited a cowshed, or dealt with a construction company, you know what I’m talking about,” he said.
Bod attributed recent government measures to growing social tensions, especially in rural areas, fueled by negative propaganda surrounding migration. However, he argued that large-scale investments depend on foreign labor. “To staff these massive projects, you need thousands of operators in one place. Without importing labor, there’s hardly another way to meet this demand,” he concluded.
Hungary’s economic challenges are mounting, with external pressures like Trump’s trade policies and internal missteps compounding the nation’s woes. Bod’s message is clear: bold action and structural reform are needed if Hungary hopes to steer clear of further stagnation.
