One of the more encouraging developments is the turnaround in Hungary’s current account. After a sharp deterioration during the energy crisis, driven by soaring import costs, the balance has shifted back into surplus territory. Lower energy prices, subdued domestic demand, and a strong export performance (particularly in the automotive and battery sectors) have contributed to this improvement.
However, this surplus is not without caveats. It reflects weak internal demand as much as competitiveness gains. As consumption and investment recover, the current account could again come under pressure, especially if energy prices rise or export markets weaken. Hungary’s high dependence on imported energy remains a structural vulnerability.
The fiscal outlook is arguably the most pressing concern. Hungary’s budget deficit has remained elevated, consistently exceeding EU thresholds. Expenditure pressures, ranging from social transfers to interest payments, have limited the pace of adjustment. Quasi-fiscal measures and state-led investment programs further strain public finances.
The current budget deficit has grown significantly since March. We have already reached 83% of the annual deficit plan, partly due to pre-election handouts.
The government debt-to-GDP ratio remains high compared to regional peers. At the end of 2025, it stood at 74.6%, higher than the Czech Republic, Poland, or Slovakia. Rising borrowing costs in a higher interest rate environment have increased debt-servicing burdens. For the incoming government, balancing fiscal discipline with political and social expectations will be a central dilemma.
Access to European Union funds remains a key variable. Hungary has faced delays and partial suspensions of EU transfers due to rule-of-law concerns. While some progress has been made in unlocking funds, disbursements remain uneven and conditional.
These resources are vital not only for public investment but also for private sector confidence. A prolonged impasse would weigh on growth prospects and complicate fiscal consolidation.
Negotiations have already begun between the prime minister-designate and Ursula von der Leyen, president of the European Commission, on the release of funds, but time is of the essence. Recovery and Resilience Facility funds must be used by the end of August, for example.
The Hungarian economy has been practically stagnant for three years, and the pace of expansion remains modest. Investment activity has been uneven, with corporate spending constrained by uncertainty, high financing costs, and regulatory unpredictability.
According to ING Bank analyst Péter Virovácz , economic growth is currently expected to be only 1.6% in 2026, with an average annual inflation rate of 3.4%. The rate of price increase could peak at 4.5-5% during the year.
Hungary experienced one of the highest inflation rates in the European Union in recent years. Although price pressures have eased significantly, inflation remains a sensitive issue. Core inflation, while declining, continues to reflect underlying cost pressures in services and wages.
The central bank has begun cautiously easing monetary policy, but it must remain vigilant. Exchange rate volatility and external shocks, particularly energy price fluctuations from the war against Iran, could reignite inflationary pressures. Maintaining price stability without undermining growth will require careful coordination.
The labor market has remained resilient so far. Employment levels are high, and unemployment remains relatively low by historical standards. However, signs of cooling are emerging. Certain sectors, particularly industry, have begun to show weaker hiring dynamics, reflecting softer demand. At the same time, structural labor shortages persist in skilled occupations, while demographic trends continue to constrain workforce growth.
Wage pressures remain elevated, contributing to inflation but also supporting household incomes. The challenge for policymakers will be to sustain employment while improving productivity and addressing skills mismatches.
The Tisza government will face a multifaceted policy agenda from day one. First, restoring fiscal credibility without derailing growth will be essential. This will likely require a combination of expenditure rationalization, improved tax efficiency, and a reassessment of state-led investment priorities.
Second, rebuilding relations with the European Union to secure funding flows is critical. Beyond the immediate financial impact, this will also influence investor sentiment. Third, the government must address structural weaknesses in the economy. Heavy reliance on a narrow set of export industries, high energy dependence, and low productivity growth remain persistent concerns.
Finally, maintaining macroeconomic stability in a volatile global environment will test policy coordination. External shocks, from geopolitical tensions to shifts in global financial conditions, could quickly alter the outlook.
This article was first published in the Budapest Business Journal print issue of April 24, 2026.
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