Economist: All conditions in place to change the semi-authoritarian government in Hungary

Hungary may be facing its first genuine chance for political change in over a decade, according to prominent economist Viktor Zsiday. Speaking to Magyar Hang, the portfolio manager of the Citadella investment fund said that the country currently meets all three criteria typically required to unseat the leadership of a semi-authoritarian system.

Zsiday stressed that this does not guarantee a change of government in 2026, but it creates a real possibility, which is something foreign investors have begun to take seriously. “In semi-authoritarian systems like Hungary, three things are usually needed to replace the leader,” he explained.

“A deteriorating economic situation that erodes the government’s standing, a united opposition platform, and a charismatic figure to lead it. At the moment, all three are present.”

Tisza may win, but would inherit tight constraints

While he sees a potential path to victory for the Tisza Party, Zsiday warned that any new government would face extremely limited fiscal room. Popular measures introduced by Fidesz, such as tax exemptions for women and the 14th-month pension, are politically untouchable, making rapid consolidation unavoidable. Reversing them, he said, “would cause an immediate and drastic collapse in popularity”.

This leaves the next administration with only two options: cut spending or raise taxes. Even the Tisza Party, he argued, would have to maintain several of the government’s recent mood-boosting spending programmes.

The economist also stressed that the new leadership would need to act immediately on two fronts: securing frozen EU funds and sending a clear signal that Hungary intends to join the eurozone, Telex writes based on Magyar Hang. Only with renewed credibility in the EU, access to EU resources, and a steady commitment toward euro adoption can Hungary resume meaningful economic growth, the economist said.

Growth potential exists, but only with a strategic shift

Zsiday believes there is no structural barrier preventing Hungary from achieving 3% annual economic growth for 5–10 consecutive years from 2027 onwards. But this scenario depends on one prerequisite: reintegration into the European mainstream. “We need to bring home the EU funds and move decisively towards the euro area,” he said.

He also suggested future reforms should prioritise healthcare and education: two areas that have struggled with underinvestment for many years.

Rising deficit, election spending and investor caution

The economist voiced concern over the government’s alleged consideration of new welfare measures aimed at countering its electoral disadvantage. These might provide short-term political benefits, but they would exacerbate a budget deficit already near 6%. Such a trend carries significant risk: investors could offload Hungarian bonds, triggering further yield increases, forint weakening and even a credit rating downgrade.

He noted that bond yields had already risen by 30–40 basis points in recent days: a warning sign that the markets are growing nervous.

The “financial shield” with Trump offers little real protection

Zsiday also commented on the so-called “financial protection deal” discussed between Viktor Orbán and Donald Trump. Whether it takes the form of a currency swap or a bank loan, he argued, such a mechanism would only be relevant in a crisis situation and would not lower Hungary’s financing costs. The government’s actual room for manoeuvre extends only as far as the stability of the forint and long-term yields allow.

Foreign investors now see a real contest in 2026

According to Zsiday, international investors are increasingly considering the possibility of an opposition victory: something they did not expect even in 2022. This sentiment has contributed to the strength of the forint. “When investors make decisions about Hungarian bonds or the currency, they keep in mind a Polish-style scenario where the opposition can win,” he said.

But ultimately, Zsiday emphasised, economic realities will shape the 2026 election far more than foreign policy or relationships with figures like Donald Trump.

• However, some recent polls suggest that PM Orbán may keep his seat until 2030.