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Hungarian Minister of Economy sets ambitious second-half GDP growth target
Hungary’s GDP growth is expected to exceed 3pc in the second half of 2025, National Economy Minister Márton Nagy said at a press conference in Budapest on Monday.
GDP growth in H2
Nagy said his ministry put GDP growth at 2.5pc for 2025 and 4.1pc for 2026. The ministry forecasts GDP growth of 3.9pc in 2027 and 4.1pc in 2028, he added. Nagy noted that the forecasts were around the middle of the National Bank of Hungary’s latest forecast ranges.
He said expanding consumption, supported by real wage growth, a cap on markups on some food products, higher tax allowances and a PIT exemption for mothers of three, would drive GDP growth this year. He added that retail sales growth was at 4-5pc at present and could reach 5-10pc in H2. Big investments that are set to start production in the near future will also make a significant contribution to GDP growth, he said.
A reform of Germany’s “debt brake” could add close to one percentage point to the country’s GDP, which would be a “great opportunity” for Hungary, he added.
Inflation in Hungary
He said inflation would accelerate temporarily to 4.5pc in 2025, but could fall to 3.6pc in 2026 before reaching the central bank’s 3pc target from 2027. Nagy highlighted “unjustified” price increases for food as well as banking and telecommunications services and said the government would do everything in its power to protect households.
He added that the prices of 884 of the some thousand basic food products affected by a mandatory cap on markups had fallen, by 18.1pc on average. He put food price inflation around 7pc in March and 5pc in April. Nagy said the government was “moving in the direction” of capping retail bank account fees at end-2024 levels.
Telcos in Hungary
He said talks with telcos on voluntary price limits were underway. Even though the government has phased out a telco tax, the prices of telecommunications services have risen by an “unacceptable” degree: by 15.6pc year-on-year in February, including a 19.6pc increase for TV, internet and telephone services, he added. He said that
Telcos will likely have a week to prepare to roll out new tariffs.
Nagy said average wage growth could remain over 8pc in 2025-2029.
He said work on drafting the 2026 budget had started, and lawmakers could approve the bill in the summer.
Fielding questions, Nagy said he saw no chance of retail and banking sector taxes being phased out. He said a bill had been drafted that would cease the National Bank of Hungary’s foundation-related activities. Nagy said it was still too early to draw conclusions regarding the impact of United States tariffs on car imports. He added that car makers were involved in intensive behind-the-scenes negotiations.
He said a bill raising the threshold for investment funds’ holdings of government securities will be submitted during the week, adding that there was no reason to modify this year’s debt financing plan.
The National Bank of Hungary does not share his optimism:
https://think.ing.com/articles/national-bank-of-hungary-review-worsening-macroeconomic-outlook/
TLDR: “worsening macroeconomic outlook” – and the numbers are VERY different from what Mr. Nagy is presenting.
So, we seek to improve the economy of Hungary by refusing to renew residency permits for many non EU foreigners who live in Hungary and spend most of their money in the Hungarian economy.? The Hungarian government sure has a strange way of trying to improve the local economy. I guess my 27 percent VAT does nothing to help? Sp, when we all leave after our Residency expires how do they propose to replace the money we take elsewhere? There have to be more than 50 thousand non EU foreigners in Hungary, let us suppose that 40 thousand of us have to leave? let us suppose that we on average contribute 16 million forints into the economy. that means about 160 million forints of potential lost VAT revenue potentially going elsewhere. plus all the effects on job losses etc, etc. Seems like the left hand does not know what the right hand is doing.
Pardon me, I meant 1.6 Billion forints not 160 million forints
No worries. Our devaluing currency with lots of zeros is confusing at the best of times. And, unfortunately, a lot of stuff does not make sense in Hungary – unless seen through the eyes of Politicians addicted to power. Nevertheless, up until now, still enough turkeys voting for Christmas!