We do not see it yet in the current quarter, but at the beginning of 2025, we can expect explosive growth.” Where do we find ourselves today?
According to detailed data published by the Central Statistical Office (KSH) on March 4, year-on-year GDP growth in Q4 2024 was 0.1% and 0.5% compared to the previous quarter. Thus, the Hungarian economy exited the recession, albeit barely. The positive side was fueled mainly by internal consumption, which grew by 4.3%.
The Hungarian Economic Association (MKT) held its kickoff conference in February, where experts from the National Bank of Hungary, the Ministry for National Economy, market research companies, and banks discussed forecasts for this year. The consensus was that yearly GDP growth would be between 1.8% and 2.5%, while inflation would range between 5% and 5.5%.
Much depends on the evolution of the German economy, the participants added. As for the first quarter, expected to be “explosive” by the prime minister, economists surveyed by Bloomberg at the end of February forecasted 0.5% growth, with 1.4% for Q2. For the full year 2025, respondents expect 2.3% GDP growth and 4.5% inflation.
Compared to the 20% inflation two years ago, a 5% rate sounds bearable, and the long-awaited increase in household consumption seems to be starting. Intrum, in cooperation with market researcher GKI, periodically releases the Intrum Solvency Index (IFI), which measures household capacity for spending.
Contrary to official statistics, the latest IFI, released in January, showed a deterioration in household solvency in Q4 2024, declining by 18% compared to the previous quarter. Gross average income also rose in Q4 to HUF 633,500, an increase of 13.5% nominally and 9.6% in real terms.
The household savings rate remains among the highest in Europe, which, according to Intrum, indicates that Hungarians are being very prudent about their savings and not optimistic about the future. A broader comparison with European trends paints an even worse picture, says Károly Deszpot, Intrum’s deputy CEO.
“According to Eurostat, consumption based on purchasing power parity shows that Hungary, Bulgaria, Latvia, and Estonia are the worst-performing in the EU. In 2023, Hungarian consumption barely reached 70% of the EU average,” Deszpot said.
The explanation is not necessarily that Hungary has become a poorer country but rather that other countries have developed more rapidly. This year, a slight improvement in household solvency is visible, but the long-term effects of current economic policies remain unclear.
In 2026, Hungary will hold national elections, and usually, during the pre-election period, the government introduces generous spending and incentives, which could boost household spending, Intrum notes.
From the employers’ side, households cannot count on a rapid income expansion this year. HR company Manpower surveyed 300 Hungarian companies, and the results, released on March 3, indicate that a large majority (78%) planned to raise salaries in the first six months of 2025. However, one-third of them intended to increase wages by only 5%.
Given the forecasted 5% annual inflation rate, employees would need a raise of at least 6% to maintain purchasing power. However, according to the Manpower survey, only 41.4% of companies planning salary increases intend to raise them by 6-10%.
Commenting on the results, Péter Varga, CEO of Manpower Hungary, stated: “This year, the gap between employers’ salary offers and employees’ expectations has significantly widened. Employees would only be satisfied with raises above 10%, but according to the latest data, only 5-6% of employers are willing to offer that.”
Last year, the average salary increase was around 13%, but forecasts for this year are much lower, Varga added. Employees in the telecom, electronics and electrical engineering, accounting, and HR sectors are less likely to receive raises above 5%. At the same time, those working in IT, retail, science, and education may expect increases of 20% or more, according to the Manpower survey.
Low salary increases make higher employee turnover more likely. However, not everything is about money. Surveys conducted by Big Four consultancy firms PwC and KPMG show that employees value other factors, too. According to PwC, salary is the No. 1 priority, but other equally important factors include:
• Respect for private life;
• A cooperative, supportive team; and
• Professional, supportive leadership
Although not in the top 10, a clear company vision and strategic transparency were also found to be important to employees.
KPMG’s “Friends at Work” survey confirms the importance of a cooperative and supportive team. The survey, conducted among 1,000 employees, “clearly shows that workplace friendships improve mental well-being and job satisfaction,” said Zita Erős, HR director at KPMG. Four out of five respondents stated that having friends at work is very important, contributing to a greater commitment to their jobs.
These findings are crucial for employers, as fostering workplace friendships can help retain valuable employees. The survey also revealed that 83% of those considering quitting their jobs consider whether they will feel isolated in a potential new workplace. An important question remains: Should employees try to be friends with their superiors?
The KPMG survey indicates that most employees view their superiors as professional mentors rather than friends. This could be linked to less than half of respondents feeling that their team leader takes the time to get to know them personally. However, this is not necessarily a problem. What truly matters, KPMG states, is that employers create an environment where employees feel valued, motivated, and loyal to the company.
This article was first published in the Budapest Business Journal print issue of March 7, 2025.
Producing journalism that is worthy of the name is a costly business. For over 30 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.
