The Central Statistical Office (KSH) confirmed the preliminary data in its second, detailed estimate: economic performance grew by 0.6% on an annual basis in the third quarter, while it stagnated on a quarterly basis.
The Hungarian economy has been in a state of near stagnation for more than three years: its performance has fallen eight times in the past 13 quarters, has grown only four times, and has now remained flat. Looking at the big picture, industry is being pressured by weak demand from external markets and the competitiveness challenges faced by the European automotive sector, while the construction industry is being dragged down by domestic investment demand, and adverse weather has added to this, depressing agricultural.
The downward factors are offset by the service sector, which can primarily benefit from higher household incomes. All this means that services were practically the only element able to contribute significantly to the annualized third-quarter GDP growth of 0.6%. Industry dragged down performance, and the construction industry, which followed a zigzag path but, in any case, had a small weight, made a contribution close to stagnation. It is a minor surprise that in the end, agriculture reduced growth by only 0.2 percentage points, but that also means that growth decreased even after the effect of bad weather was eliminated.
Based on the data for the first three quarters, an annual average economic growth of 0.4% is expected this year, according to Dániel Molnár, head analyst at economic think-tank GFÜ, commenting on the second reading of the GDP data.
“This requires a stronger expansion of at least 0.6% on a quarterly basis in the last quarter, and a 0.5% dynamic requires at least 1% quarterly growth. However, the performance of the last three months is not only a key issue in terms of this year’s GDP, but due to the lingering effect, how the economy performs at the end of the year will also be decisive in terms of next year’s prospects,” he notes.
“Sectoral data is only available for tourism, which performed favorably, but based on the October foreign trade data, industry may have started the quarter weakly,” he adds.
As for the near future, Molnár said that he expected economic growth to pick up next year, with the rate of expansion likely to be in the 2-3% range. The external environment will strongly influence the extent of that, however. This will be determined on the one hand by how quickly the results of the German fiscal stimulus appear in the German economy, and from there trickle through to Hungary via exports, and on the other hand by whether the Russian-Ukrainian war can be concluded, which could support growth through energy prices and improved risk perception.
In the meantime, industrial production in October finally showed some positive development: based on seasonally and working-day-adjusted data, its volume increased by 0.5% compared to September, but decreased by 2.7% compared to a year earlier, according to fresh data released from KSH. Industrial production in the first 10 months of the year was 3.3% lower than in the same period in 2024.
Production volume in most of the manufacturing sectors decreased compared to October last year. Within this, the most significant decline was in the production of vehicles, electrical equipment, and food, beverage, and tobacco products, while the production of computers, electronics, and optical products expanded.
According to Péter Virovácz, a senior economist at ING, there is still no significant change in the data in terms of the big picture.
“Although the various confidence indices have mostly improved in recent months, the optimism built on this may prove to be fragile. Capacity utilization has not moved significantly upwards, and most companies are still complaining about a lack of demand and orders. Although German industrial orders have been expanding for two months, this was preceded by a persistent contraction,” Virovácz wrote in a recent commentary.
The analyst also highlighted that this is the first time since spring that Hungarian industry has seen its production volume expand on a monthly basis for two consecutive months. According to Virovácz, it seems, therefore, increasingly likely that industrial output has stabilized, albeit at a low level, 6.4% below the 2021 average.
According to the analyst, the outlook for domestic industrial companies producing for export remains gloomy and uncertain, with no general recovery expected.
“We continue to expect a global turnaround in the inventory cycle, so that demand for industrial goods will start to pick up. However, there are no signs of this yet,” Virovácz added.
However, regarding the Hungarian GDP outlook for the fourth quarter, the overall picture of the latest retail and industrial data is relatively favorable, according to Virovácz, which suggests that an average economic growth of 0.5% this year still seems possible.
“Of course, this is a small consolation, but a good final quarter would definitely be necessary for GDP growth in 2026 to be more significant, significantly above 2%,” he wrote.
This article was first published in the Budapest Business Journal print issue of December 12, 2025.
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