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.
If you think Hungary has a semi authoritarian government I would like to ask you, How do you rate, Germany, United Kingdom? Both of those countries are Full Blown Authoritarian police states. When I am the UK or Germany I see a lot of police activity. I do see some police activity in Hungary but certainly not at the level I see in UK and Germany. In the UK and Germany people dare not speak openly about controversial subjects for fear of being charged for hate speech or subversion. I have not feared speaking out about controversial topics living in Hungary. Freedom of speech is tolerated here. Judging by the articles posted by this media outlet and the ones available online I do not get the idea that the media is being censored by the government since their seems to be a lot of bias against the current government of Hungary and to my knowledge no one has been coerced to take down articles or been fined or closed down by the government recently.
I would suggest Hungary more semi-authoritarian. Yes, we still have real elections, however we are faced with declining checks and balances as well as weak media pluralism. Oh – and then there is our Politicians – ruling by decree.
Whereas Germany and UK have their own challenges, be it scandals, populism or economic headwinds, they remain robust, liberal democracies with strong checks and balances as well as a more diverse media.
Re policing – glad you brought this up. It is so interesting!
In Hungary, the police is now used to crack down on opposition protests, then we have surveillance of activists, journalists, and civil society. We also have curbing of assembly rights under the moniker of public order – since we live in a constant State of Emergency or Alarm. Very unique in Europe. We are not a police state, yet, but our Politicians are more than happy to use the police apparatus as security power for regime stability. Threatening facial recognition and prosecution at mass protests, anyone?
Conversely in Germany, there are pretty strict limits and public oversight. If only because police are decentralized into Länder and Federal police with their own competencies.
As you may have noticed, German police have bodycams and are subject to oversight (and this oversight also extends to surveillance, which is highly restricted and subject to judicial warrants). Different animal.
In the United Kingdom, you may have a point, since the introduction of the Police, Crime, Sentencing and Courts Act (2022). One advantage of Brexit, I suppose, since this law would almost certainly run into European Union trouble. However, the police is still at arms length from political control. Watch this space …