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The Hungarian economy produced only marginal growth in 2025, according to preliminary data released by the Central Statistical Office (KSH) at the end of January. Based on the first estimate, GDP expanded by 0.4% year-on-year, or 0.3% after calendar adjustments, compared with 2024.
Looking at quarterly developments, GDP contracted by 0.3% in the first quarter compared with the same period a year earlier. Growth returned modestly in the second quarter, with output rising by 0.3%, followed by a stronger 0.7% expansion in the third quarter. In the final quarter of the year, GDP increased by 0.7% in unadjusted terms and by 0.5% after seasonal adjustment, according to the initial estimate.
At this stage, the available data suggest that growth was driven primarily by the services sector, most notably financial and insurance activities and trade, as well as by construction. Industrial output, however, continued to weigh heavily on overall economic performance, recording the largest drag on growth. The statistical office is scheduled to publish detailed breakdowns on the GDP data on March 3.
“The quarter-on-quarter growth of 0.2% slightly exceeded our expectation of stagnation, but still fell short of the more optimistic market consensus,” said Orsolya Nyeste, chief macroeconomic analyst at Erste Bank. The figures effectively indicate near-stagnation compared with 2024, Nyeste noted.
According to the analyst, the KSH’s brief commentary suggests that the detailed data is unlikely to bring significant surprises. Alongside expanding services, household consumption likely remained the key driver of growth, while ongoing industrial weakness probably prevented any meaningful improvement in export performance. From an outlook perspective, a crucial question is whether any positive turnaround occurred in investment activity.
Overall, the subdued quarterly performance signals that there was no significant improvement in economic momentum toward the end of last year. This weak carryover effect is expected to weigh on growth in 2026 as well, Nyeste added.
“As for this year’s outlook, we expect Hungary’s economy to gradually emerge from stagnation in 2026, supported by a recovery in external demand and improving European economic conditions,” she said.
“However, it is not an encouraging sign that the recent improvement in German data has so far translated only marginally into domestic indicators. We currently forecast annual GDP growth of around 2% in 2026, but risks are clearly skewed to the downside, as the lack of momentum at the end of last year continues to cast a shadow over this year’s growth prospects.”
Commenting on the latest figures, Dániel Molnár, chief analyst at the economic think tank GFÜ Gazdaságkutató, also emphasized that the data fell short of earlier expectations, which had pointed to stronger growth on both a quarterly and annual basis.
Like Nyeste, Molnár highlighted that services, particularly the financial sector and trade, as well as construction, provided upward support to economic output. Within services, household consumption played a key role, supported by rising real wages and the expansion of family support measures, such as enhanced tax allowances and income tax exemptions for mothers with three children, which likely continued to contribute positively in the fourth quarter.
Annual growth in construction is also reflected in sectoral data, driven primarily by public investment, especially road construction, while the impact of residential developments may have begun to materialize toward year-end.
By contrast, industrial performance continued to restrain growth. This weakness is still largely attributable to subdued external demand, particularly the prolonged downturn in the German economy, which has negatively affected Hungary’s export-oriented manufacturing sector.
At the same time, excess capacity and heightened uncertainty have dampened corporate investment appetite. The GDP data suggests that the contraction in investment did not halt in the fourth quarter.
Molnár stressed that fourth-quarter performance is especially important given its strong carryover effects on growth the following year. Despite the weaker-than-expected data, he believes that economic growth of above 2% remains achievable this year.
He expects consumption to remain the primary growth engine, supported by further expansion of family benefits, accelerating wage growth, and slowing inflation, all of which should translate into stronger real wage dynamics and improved household income conditions.
However, faster growth will depend on a recovery in external demand, a fiscal turnaround in Germany, and the successful ramp-up of major investment projects in Hungary. These factors could also boost corporate investment sentiment, further supported by reduced uncertainty and easing geopolitical tensions, most notably a potential resolution of the Russia–Ukraine war.
A few days after the release of the GDP data, the KSH also published the first reading of December industrial production and of last year as a whole. In December 2025, the volume of industrial production, adjusted for working-day effects, was 1% lower than in December 2024, which was slightly better than the 1.5% decline analysts had expected. The unadjusted data showed an increase of 1.8% on an annual basis.
On a monthly basis, after a significant decline in November, the sector gained some momentum in December, and output increased by 0.9%. The volume of industrial production decreased by 3.2% on an annual basis for the whole of last year.
This article was first published in the Budapest Business Journal print issue of February 13, 2026.
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