According to Equilor, Hungary could see growth return in the second half of this year, supported by rising domestic consumption and the long-awaited start of production at three major industrial projects: BYD, BMW, and CATL.
The company projects GDP growth of 2.2% for 2025 and 3.4% in 2026. (Both are above the projections in the latest Regional Economic Prospects report released on Sep. 25 by the European Bank for Reconstruction and Development, which put the figures at 0.5% and 2%, respectively.) Inflation, however, remains a concern, with the forint’s recent weakening adding pressure. The currency could depreciate further, reaching HUF 420 per euro by the end of the year, Equilor warns.
“Donald Trump’s election has brought a less predictable course to American economic policy,” said Gergely Muhi, Equilor’s chief analyst. He emphasized that, if all the president’s campaign promises were implemented, they could have profound negative implications for the U.S. and global economies. “Of course, it cannot be ruled out that some of these pledges will be diluted before approval, or may never be implemented at all,” he added.
The United States economy expanded robustly in 2024, with inflation brought down successfully. However, Equilor underlined that upward risks remain.
“The greatest uncertainty comes from Trump’s trade policy, because it has the potential to affect both growth and inflation,” said Muhi.
While the U.S. economy shows resilience, Equilor’s outlook for other regions is far less optimistic. Growth in Europe is expected to remain weak, while China’s efforts to stimulate activity may fall short of delivering substantial results. In the Eurozone, concerns about inflation have given way to anxieties over stagnation. Inflation has been contained within a 2–2.5% range, but growth remains subdued.
“The German economy, which represents nearly 30% of the Eurozone, is still struggling,” said Muhi. “High energy prices and weakening demand continue to weigh on the industrial sector.” As a result, Germany is projected to grow by just 1.1% in 2025 after posting 0.7% in 2024.
The European Central Bank is cutting interest rates faster than anticipated, but long-term U.S. rates are likely to remain higher than expected. This divergence leaves emerging-market central banks with limited room to maneuver.
Turning to Hungary, Equilor expects household consumption to strengthen this year, bolstered by real wage growth and a gradual decline in precautionary savings. Additional stimulus could come from capital leaving the government bond market, which may feed into higher consumption.
“The launch of production at BYD, BMW, and CATL in the second half will give an extra boost to growth,” said Muhi. He cautioned, however, that the actual impact on GDP would depend heavily on global automotive demand. Equilor estimates that the three plants could lift GDP by 0.6 percentage points this year, 0.8 points in 2026, and contribute up to 2% by 2030.
The agricultural sector is also expected to play a stronger role, due to favorable base effects. (When the summer harvest was completed at the end of August, both crop yields per hectare and the total amount harvested had exceeded expectations, Minister of Agriculture István Nagy was quoted as saying. Crop yields of all summer cereals as well as rapeseed exceeded the five-year averages, the minister said.) Still, Hungary’s most important export market, the German industrial sector, shows no sign of meaningful recovery.
On monetary policy, Equilor expects the Hungarian National Bank (MNB) tocut rates by a total of 50 basis points this year, with the next reduction likely in the third quarter, depending on developments in inflation and the exchange rate.
“We expect the pace of cuts to accelerate in 2026,” said Zoltán Varga, senior analyst at Equilor.
The recent weakening of the forint is complicating the inflation picture. Last year’s average exchange rate was HUF 395.4 per euro, but the currency has since depreciated by nearly 5%.
“Around a quarter of the weakening feeds directly into consumer prices,” Varga explained. “If the forint remains at its current level, inflation could increase by more than one percentage point.” He expects the euro to close the year at around HUF 420, with an average inflation rate of 4% in 2025, easing to 3.5% in 2026.
Hungary is likely to avoid a recession, but the recovery remains sluggish, supported primarily by household consumption. Investment activity remains muted, although wage growth and government programs offer some support.
For investors, the environment is far from easy. The risks are higher than in previous years, and the recent rally leaves less room for significant gains. Still, Muhi remains cautiously optimistic.
“Despite the uncertainties, there are still opportunities to achieve good returns,” he said. “If we look at short-term impacts, the U.S. market is positioned to perform best.”
Protectionist tariffs may temporarily benefit U.S. industry, while stable growth and productivity improvements from artificial intelligence adoption are boosting corporate profitability. However, Muhi warned against over-optimism.
“The major indices already reflect a very positive outlook, so we do not expect a substantial further rally.” Instead, investors should anticipate single-digit increases, in line with corporate earnings growth.
Equilor recommends that investors increase the share of low-risk assets in their portfolios to maintain flexibility. Hungarian retail bonds such as PMÁP are expected to become less attractive after upcoming coupon resets, while alternatives like FixMÁP or potential new issuances may be more appealing.
Short-term U.S. government bonds could also offer favorable returns, supported by a strong dollar. Equilor also sees investment potential in Poland, particularly in retail companies hit hard by declining consumption but likely to recover as demand rebounds.
“It is worth considering shares of Central Europe’s leading discount retailer Pepco, as well as Jeronimo Martins, operator of the Biedronka supermarket chain,” Muhi suggested.
Among Hungarian equities, the firm highlights Gránit Bank, with a 12-month target price of HUF 18,306, and Magyar Telekom, with a target of HUF 1,550. It should be noted, if only in passing, that Gránit Bank acquired a 50% plus 1 vote stake in Equilor Befektetés Zrt. in 2022.
This article was first published in the Budapest Business Journal print issue of October 3, 2025.
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