Hungary’s 2026 budget faces significant growth risks, council flags global uncertainty

The Fiscal Council raised no fundamental objections to the government’s 2026 budget draft, but did point to risks affecting targets amid increased uncertainty in the global economic environment in an opinion issued on Monday.

Lower-than-expected first-quarter GDP and global trade tensions pose risks for achieving the 2.5% economic growth target in 2025, the Council said. High tariffs could impact Hungary’s export sector unfavourably, while the uncertain outlook could weigh on investment activity, it added.

The Council said that the continued increase in domestic consumption, driven by high employment, higher real wages and government measures boosting households’ net incomes, would mitigate those risks.

The Council said that deviations from macroeconomic assumptions could trigger a review of an earlier agreement on minimum wages reached between employers, unions and the government. The Council acknowledged the 3.7%-of-GDP accrual-based deficit target for 2026, paired with a primary deficit of zero, but said the gap should still be brought under 3%.

The Council also highlighted the risk of lower revenue related to underperforming GDP and uncertainty surrounding transfers from Brussels. It added that the HUF 50bn of reserves in the budget for extraordinary government measures was lower than in earlier years and recommended raising the amount.