Hungary’s economic outlook for 2025: here’s what experts have to say on inflation, forint exchange rate

Hungary’s economy is set for 4.6% inflation in 2025, with GDP growth expected at 2.6%, according to MBH Bank analysts. Economic expansion is anticipated, especially in the latter half of the year, driven by rising investments. Quarterly growth may reach 4% by year-end and sustain into 2025.

External economic conditions show mixed signals. According to the report of Növekedés, while Germany’s new government may boost its economy, competition with Chinese firms remains a challenge. A swift end to the Russia-Ukraine war could lower gas prices, potentially lifting Hungary’s growth by 0.5%.

Hungary’s fiscal deficit is expected to decline to around 4%, yet meeting the government’s 3.7% target will require additional measures. Higher-than-expected inflation could increase tax revenues, limiting the deficit’s overshoot. Consumption is projected to rise, and investments should no longer weigh down GDP.

Inflation remains above the central bank’s target, pushed by rising service costs and early-year tax hikes. The European Central Bank and the U.S. Federal Reserve have begun easing interest rates as inflation stabilises in their respective regions.

The EUR/HUF exchange rate is forecasted to average 404 this year. Strengthening the currency depends on the Hungarian central bank maintaining its 6.5% interest rate and positive developments in the war. The USD/HUF rate is projected at 387.5, with Hungary’s base rate potentially dropping to 6.25% by year-end.

Germany’s economic improvement is crucial for Hungary’s 3.6% growth target. However, structural issues in the German economy pose long-term challenges, making immediate recovery unlikely.

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