That was the message from an ING Bank briefing led by senior economist Péter Virovácz, who urges caution: the engine is moving, but not at the pace the economy once considered normal.

Virovácz predicts the first meaningful improvement in several years will come in 2026, but even that will be below historical patterns. The likely result is persistent inflation, which will have to be managed with relatively high interest rates, lifting forint stability to a central policy priority.

“This is the fourth year when we expect that next year will be better. And it’s not about pointing fingers because a minister cannot hit the numbers, because we in the analyst community cannot either,” Virovácz says.

Forecasts have been marked down as the months have passed. The earlier view that potential growth sat at around 3–3.5% has slipped. Many market projections for 2026 cluster closer to 2.5%; ING is at 2.3%.

As Virovácz puts it, “We can call what we have now ‘growth,’ because it is above zero, but this is not what we agreed on.” He added that 2025 might even underperform last year’s weak 0.6% outcome.

ING’s route to something sturdier rests on three conditions. Investment has to climb out of roughly three years of decline; otherwise, capacity and productivity will remain constrained. Secondly, external demand needs to improve; export orders are still about 15% below 2021 levels, weighing on manufacturing and supplier networks. Third, household consumption is the only component showing steady growth and needs to keep firming without reigniting prices.

If this trio of elements aligns, headline GDP could approach 3% later in the decade. The path is feasible, though neither quick nor guaranteed, the chief economist warns. Confidence would help shorten that road. Half a year ago, business and consumer sentiment were falling sharply.

“If confidence improves, sooner or later there can be some positive economic performance,” Virovácz said, noting that both have been moving up for months, even if the distance to full normalization remains large.

Mixed Signals

Labor-market signals are mixed. Industry, especially processing and manufacturing, continues to feel the strain, yet broad layoffs have not appeared. Firms are still hoarding labor, and unemployment has mainly moved sideways.

“Unemployment has been essentially flat, moving sideways,” Virovácz says. Since 2022, the labor force has shrunk by roughly 125,000 people. That is “as if we had wiped the sixth-largest Hungarian city, Győr, off the labor-market map,” he adds. With fewer available workers, employers hesitate to let go of people they may struggle to rehire.

These constraints will mean sizable 2026 wage settlements. The agreements currently under discussion imply increases of 13-14%.

“Even if we can pull that down to 10%, it almost doesn’t matter for companies, because that is still very high in an economy that has been stagnant for three years,” Virovácz notes. The key question is how firms absorb those costs. Two extremes are possible.

“Either we will face a price shock, or a labor-market shock,” the ING expert warns, although he acknowledges that a mixed, less disruptive outcome is also conceivable.

On fiscal policy, Virovácz does not expect a rerun of 2021–2022. Back then, pre-election transfers totaled 3-3.5% of GDP and were not fully embedded in the budget.

“This time the measures are around 2% of GDP, and most are already in the 2026 budget,” he says. The primary balance, excluding interest, sits between zero and minus 1%. He does not foresee a budget break.

Ratings Assessments

“The financial authorities stretch only as far as the markets allow,” Virovácz said, pointing to the focus on preserving sovereign ratings. Two assessments are still due this year. With Moody’s in late November, “the bar could wobble,” though even a one-notch downgrade would still leave Hungary at the lowest investment-grade rung. Fitch, in early December, “will probably not downgrade us.”

Virovácz also notes that calendars can change. If there were a significant, unbudgeted fiscal push early next year, an agency could call an unscheduled review.

Inflation has shifted into a new regime. Lasting disinflation requires lowering imported price pressures. That is why “we hear the MNB recently saying that a strong forint is a good forint,” Virovácz argues.

To reach the inflation goal, “a stable, and quite possibly strengthening, forint is necessary,” although that outcome is not solely in the central bank’s gift. Even with supportive FX dynamics, the analyst places a sustained return to the MNB’s 2-4% target band no earlier than 2028.

Manufacturing weakness is uneven: exporters tied to eurozone capex and durable goods feel the drag most, while niches linked to EV supply chains and energy-efficiency projects have held up better. Services continue to support activity and employment, although that support could fade if real-income gains stall.

Credit conditions remain tighter than before the shocks, consistent with higher policy rates and cautious underwriting, which slows capital deepening outside a handful of large projects. On the household side, real wages are improving from a low base as inflation eases, yet purchasing power is being rebuilt only gradually.

Virovácz argues that policy implications follow all of this. Monetary authorities are unlikely to ease quickly if FX stability anchors disinflation. Fiscal managers will keep an eye on ratings and risk premia, limiting the space for discretionary spending. Companies will need to invest selectively, automate where returns are demonstrable, and protect productivity in a tighter labor pool. Households will continue to navigate a period in which prices and real incomes realign. ING believes the transition is proceeding, but only at a measured pace.

This article was first published in the Budapest Business Journal print issue of November 14, 2025.