The volume of Hungary’s gross domestic product grew by just 0.1% according to raw data and by 0.2% according to seasonally and calendar adjusted and reconciled data in the second quarter of 2025, compared to the corresponding period of the previous year.

Compared to Q1 2025, the economic performance increased by 0.4% according to seasonally and calendar-adjusted and reconciled data. In the first half of the year, the economy stagnated according to raw data and was 0.1% lower according to seasonally and calendar-adjusted and reconciled data compared to the same period of the previous year, the latest data released by the Central Statistical Office (KSH) reveals.

“Although the latest quarterly data were slightly more favorable than our expectations, the half-year data is in line with our forecast. We expected that the first-quarter decline would be compensated for by the second quarter. Thus, the economy practically stagnated in the first half of the year compared to the same period last year,” says Dávid Németh, senior analyst at K&H, evaluating the data released on Aug. 26.

In line with expectations, services drove the Q2 economy, with the information and communication sector performing particularly well. The monthly data also showed that industry performed poorly, dragging down GDP growth. Additionally, agriculture was hindered by adverse weather conditions, further slowing growth.

Regarding the demand side of GDP, Németh notes that household consumption may have contributed to second-quarter growth, while investments and net exports may have held the economy back. Still, he believes a further recovery can be expected in the next two quarters based on the current outlook.

Positive Signs?

“We see positive signs in the construction industry, and within industry it seems that car and battery production may have passed the bottom, so the latter sub-sectors may also contribute positively to the GDP figures for the third and fourth quarters,” he says.

However, the performance of agriculture remains very uncertain. The weather has been more favorable in recent weeks, which may result in final farm produce indicators being more favorable than the current estimates.

On the demand side, household consumption remains decisive, although the increase in net real wages is slowing, which carries some risk.

“Government stimulus measures may also improve performance, although their effect may only be partially felt in 2026. The decline in investments may be cushioned by ongoing large-scale corporate projects,” the K&H expert adds. He expects overall GDP growth of around 0.5% in 2025 compared to the previous year.

The analysts at MBH Bank agree that the Q2 data was better than expected. Overall, they argue that this indicates the Hungarian economy is still capable of recovery. However, growth is slow and selective, driven mainly by domestic consumption and the services sector, while agriculture and industry continue to face challenges.

“As we suspected, services and construction probably also contributed positively to the economy’s second-quarter performance. However, industry still failed to expand, as did agriculture,” the analysts wrote in a comment.

Recession Avoided

Looking for a silver lining, Erste Bank’s head analyst Orsolya Nyeste notes that at least the Hungarian economy has once again managed to avoid a technical recession. Altogether, it is positive that the actual data was slightly better than expected, and that the economy did not shrink in two consecutive quarters in a quarterly comparison. However, the overall picture of stagnation remains unchanged for the time being.

“A better performance would be needed in the second half of the year to achieve the full annual GDP growth of 0.8% that we are currently forecasting. However, the risks (the effects of the tariff war, a weakening labor market) continue to point to the downside. The big question for the period ahead is to what extent the government’s targeted measures, [those] already known and [those] expected to come, will be able to offset these negative risks,” Nyeste says.

At the same time, investments are still performing poorly: according to the raw data, the volume in the second quarter of 2025 was 8% lower than in the same period of last year. Compared to the previous quarter, and based on seasonally adjusted data, the total value of investments decreased by 1.1% at comparable prices.

There was 11.8% less investment in the first quarter than in the first three months of last year, and the 2024 benchmark was already very weak: it had shown a 14.3% decline compared to the first quarter of 2023, and the 2023 data represented a 0.4% decrease compared to the beginning of 2022. The latest data now marks the 11th consecutive quarter with less investment than in the same period of the previous year.

More bad news was that the volume of industrial production fell by 4.9% in June compared to the same month in the previous year and by 1.2% compared to May 2025. Data from the KSH shows that there was a slight increase in the production of food, beverages and tobacco products, as well as computers, electronic and optical products, and electrical equipment. In contrast, output from vehicle manufacturing fell significantly.

This article was first published in the Budapest Business Journal print issue of September 5, 2025.