At a recent briefing by the lender, chief analyst Péter Virovácz argued that the new political cycle could create a more favorable economic environment. Even so, he warned that a change of government cannot, on its own, solve Hungary’s problems with inflation, labor supply, energy exposure, export dependence and the eventual conditions for euro adoption.
“Although economic-policy priorities are changing, we should not forget that Hungary’s fundamental conditions and macroeconomic framework have remained unchanged,” Virovácz said. “The key question now is the durability of the current momentum: are we talking about only a temporary upswing, a summer romance, or a sustainable, long-term growth path for the Hungarian economy?”
The upcoming economic agenda includes a review of public expenditure, a progressive personal income tax system and continued efforts to unlock EU funds. It also envisages creating the conditions for euro-area accession over the medium term. ING argues that policy credibility and stronger confidence may help unlock growth, but they do not eliminate the structural and external risks that continue to define Hungary’s economic room for maneuver.
ING noted that first-quarter GDP data showed the Hungarian economy had moved above its previous peak at the end of 2022. Virovácz said the expected confidence effect of the new government had been visible in improving sentiment indicators. Manufacturing has also begun to stabilize, with capacity utilization and order books trending more positively.
Large foreign direct investment projects that are close to completion or beginning production could provide another source of support. Their expected contribution to output is important, particularly after a weak period for industry. But their macroeconomic impact will depend on the external market environment and global demand, both of which remain uncertain.
Hungary is particularly exposed because it is a small, open economy whose performance remains closely tied to the global automotive cycle. Virovácz also highlighted the risks created by geopolitical tensions in the Middle East, especially around the Strait of Hormuz. Given the on-off nature of ceasefire talks, any disruption could put pressure on energy markets and on European supply chains for refined petroleum products.
“Macroeconomic developments should be viewed with restrained optimism, because external shocks and supply-side tensions continue to pose meaningful risks to the growth path,” Virovácz said. “Among market participants, previous concerns about rapidly accelerating inflation are gradually being replaced by direct real-economy fears. At present, the greatest uncertainty concerns the continuity of energy supply and the availability of global value chains and industrial raw materials.”
That distinction matters for policymakers. The prospect of stronger growth is welcome, but it could become another source of tension if domestic demand rises faster than the economy’s capacity to supply goods and services. The challenge will be to preserve a predictable inflation and interest-rate path while making use of the investment and confidence gains now emerging.
The labor market is likely to be the more serious domestic constraint. ING estimates that the economically active population has declined by nearly 160,000 since mid-2022, a loss roughly equivalent to the population of Szeged. As older generations retire, the smaller cohorts entering the labor market will leave firms with a progressively tighter supply of workers.
“The demographic challenge is not a distant risk, but the current economic reality,” Virovácz said. “The age pyramid published by the Central Statistical Office clearly shows that the large older generations leaving the labor market in the coming years will be replaced by a much smaller cohort of younger workers. This generational gap will create structural tension on the supply side and, according to our forecasts, point to a critical labor shortage by 2030.”
ING argues that foreign workers will become an increasingly important part of the answer. Restricting external labor through administrative or regulatory measures could create capacity bottlenecks and production uncertainty, particularly in industrial manufacturing and logistics. Those sectors would otherwise be expected to absorb a significant share of the new investment as it approaches the production stage.
Euro adoption raises a related but different problem. The prospect of joining the single currency has become a more prominent part of the policy debate since the general election in April, with 2030 often mentioned as a target. ING believes the deadline is politically communicable, but economically ambitious.
Virovácz said the hardest Maastricht condition may not be fiscal consolidation, but the sustained achievement of the inflation criterion. A catching-up economy that grows faster than the European average is likely to face stronger domestic price pressure as demand, investment and real convergence accelerate.
“To achieve euro-area inflation, market processes would either have to be restrained through administrative interventions and price regulation, which would lead to structural distortions and efficiency losses in the medium term, or the forint would have to be allowed to appreciate significantly,” the chief analyst said.
“Although sustained nominal strengthening of the domestic currency slows imported inflation, beyond a certain point it critically damages the international competitiveness of export capacity and manufacturing,” he noted.
“The 2030 euro-adoption target is politically easy to communicate, but I see the period between 2030 and 2034 as more realistic,” Virovácz added.
ING’s conclusion is not that the recovery is illusory. EU funds, improved confidence, and industrial investment could create a meaningful new growth phase. But the bank argues that the order of priorities matters: balanced expansion, structural reform and higher productivity must come first. Euro adoption should be the result of that work, not a substitute for it.
This article was first published in the Budapest Business Journal print issue of July 17, 2026.
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