Fitch forecasts Hungary’s general government deficit at 7.3% of GDP in 2026, substantially above the 3.1% median for its BBB-rated peers. The agency expects the shortfall to narrow to 5.8% in 2027, MTI reported.

The projected consolidation follows fiscal easing ahead of the general election and increased spending to offset the effects of drought and higher energy prices.

Fitch said the government’s commitment to meeting the criteria for eurozone accession by 2030 could provide an anchor for medium-term fiscal consolidation.

Nevertheless, Hungary’s debt burden is expected to keep rising. Fitch projects public debt at 77% of GDP in 2027, the highest among the 11 Central and Eastern European sovereigns covered by the analysis. It expects the ratio to reach 78.1% by the end of 2028, up from 74.6% at the end of 2025.

The agency also acknowledged the effect of the forint’s appreciation since the election in containing the debt burden.

Hungary’s GDP growth is forecast to accelerate from 0.5% in 2025 to 1.9% this year and 2.5% in 2027. That would put next year’s expansion slightly above Fitch’s projected regional median of 2.3%.

Despite the anticipated improvement, Fitch cited weak growth, alongside wide fiscal deficits, rising debt and domestic political uncertainty, among the factors behind Hungary’s Negative Outlook. Poland and Romania also carry Negative Outlooks.

The agency identified further deterioration in public finances, potentially resulting from looser fiscal policy or weaker economic prospects, as a key downside risk for most sovereign ratings in the region.

Across Central and Eastern Europe, Fitch expects the median budget deficit to widen to 4.2% of GDP in 2026 from 3.1% in 2025. Its latest projection is significantly worse than the 3.3% deficit it forecast for 2026 last December, reflecting higher defense spending and public investment, weaker growth and election-related fiscal easing.

The regional median deficit is expected to remain broadly unchanged at 4.1% in 2027. With the exception of Slovenia, every country covered is forecast to have a larger deficit than the median for its respective rating category.

Fitch said higher global sovereign yields and rising debt burdens were increasing debt-servicing costs. It singled out Hungary as an exception to the region’s generally limited scope for monetary easing.

The agency expects only a modest regional economic recovery next year, as lower energy costs and inflation partly offset higher financing costs, more moderate wage growth and adjustments in public investment following the end of EU Recovery and Resilience Facility disbursements.