According to data published by the Central Statistical Office (KSH), industrial production declined by 5.4% year-on-year in November. Output was also down 2% compared with October on a seasonally and working-day-adjusted basis, a result that surprised analysts on the downside. The working-day-adjusted index was identical to the unadjusted figure.
Over the first 11 months of 2025, industrial production was 3.5% lower than in the same period a year earlier. November marked the weakest monthly reading of the year and the lowest level of output in adjusted terms since early 2021.
Most manufacturing sub-sectors recorded a decline compared with October. Among the larger segments, the production of computers, electronic and optical products expanded, as did output in the food, beverages and tobacco industry. These gains, however, were outweighed by continued weakness in vehicle manufacturing and electrical equipment production, both key pillars of Hungary’s export-oriented industrial base.
“On a monthly basis, the 2% decline was well below our expectations,” said János Nagy, head analyst at Erste Bank. “There had been positive signals ahead of the release, as German industrial order books and production have strengthened in recent months, but this improvement has not yet been reflected in Hungarian data.”
Germany remains Hungary’s most important trading partner and a critical destination for its automotive exports, leaving domestic industry highly exposed to developments in the German economy. While headline indicators in Germany have stabilized, demand has yet to translate into higher output across Central European supply chains.
Looking ahead, Nagy pointed to the gradual ramp-up of BMW’s new factory in Debrecen, which entered production at the end of October, as a potential short-term support for industrial output.
“This could bring more favorable figures in the coming months,” he said. “However, the lack of a clear turnaround in the European economy, and particularly in Germany, creates substantial uncertainty for forecasts.”
He added that weak external demand limits the scope for expanding export capacity and raises questions about the utilization rates of existing plants. Those concerns were reinforced this month, when Mercedes-Benz temporarily switched to single-shift operations at its Kecskemét factory.
“At the same time, based on current information, the combined impact of new capacities at BMW in Debrecen and investments by BYD, CATL and Mercedes should result in an expansion of production in 2026 after three years of decline,” Nagy said.
Other analysts were more pessimistic about the November data. Péter Virovácz, senior analyst at ING Bank, described the figures as “a major disappointment. Industrial growth had been observed in the previous two months, and the start-up of new capacity at BMW raised hopes that another positive performance might follow,” he said. “Instead, those gains were completely wiped out.”
Virovácz highlighted that the fixed-base index shows output is now 8.5% below the 2021 average, marking another cyclical low. “The downward trend in industry is therefore continuing,” he said.
The data released so far is preliminary, and more detailed sectoral figures are expected on the day this issue is published (Friday, Jan. 16). Still, Virovácz said the overall picture remains unchanged, with production declining in most industries. Electronics continues to be a relative bright spot and has recently been joined by food processing, though he cautioned that the latter’s improvement is likely temporary.
“Despite the start of production at BMW’s Debrecen plant, output has not yet reached a level that would materially influence sector-wide indicators,” he said. “We know that ramping up production takes time, but the latest data is still disappointing.”
Virovácz said Hungary could still achieve average economic growth of around 0.5% in 2025, but only if year-end performance across sectors improves markedly. A weaker-than-expected finish, he warned, would significantly worsen the outlook for 2026 growth, currently forecast at 2–2.5%, due to an unfavorable carryover effect.
The bleak industrial figures stand in contrast to improving inflation dynamics. KSH also published December consumer price data alongside full-year 2025 inflation figures, showing a further slowdown in price pressures.
In December, consumer prices were 3.3% higher than a year earlier, down from November and firmly within the central bank’s 2–4% target range for the second consecutive month. On an annual average basis, inflation stood at 4.4% in 2025, compared with the government’s original target of 3.2%. Month-on-month, prices rose by a modest 0.1% in December.
“The data slightly exceeded both our preliminary expectations and the market consensus,” said Nagy. Core inflation eased to 3.8% year-on-year from 4.1% in November, primarily due to base effects.
The composition of inflation, however, remains mixed. Food prices fell by 0.2% in December, while household energy prices rose by 0.9%, including a 1.4% increase in the cost of piped gas and firewood. Service prices increased by an unusually high 0.8%, driven by sharp rises in freight transport, airline tickets, telecommunications services and holiday-related costs.
Prices of clothing and durable goods rose by 0.3% and 0.4%, respectively, suggesting that the earlier appreciation of the forint has yet to feed fully through to consumer prices of imported goods. Fuel prices declined by 1.7%, while pharmaceutical and medical supply prices edged up by 0.2%.
“The significant slowdown in annual inflation was largely supported by base effects carried over from 2024 and was almost entirely driven by volatile items outside core inflation,” Nagy said. “At the same time, easing producer price pressures and low energy prices point to a more favorable outlook for short-term inflation trends.”
This article was first published in the Budapest Business Journal print issue of January 16, 2026.
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