External economic factors, mainly the downturn in Germany’s automotive industry, are weighing on Hungary’s economic performance, National Economy Minister Márton Nagy said at an event organised by economy portal Világgazdaság in Budapest on Thursday.
Photo: MTI/Kocsis Zoltán
Nagy noted that domestic consumption was recovering after the impact of last year’s high inflation, and sectors dependent on local demand were performing well. He said GDP growth could climb to around 3pc with a pickup in consumption, but an increase in investments would also be needed in the long term. He added that investments were down in export-oriented sectors.
The Hungarian government has introduced a series of economic initiatives, including interest-free loans for young blue-collar workers, home renovation subsidies for families in rural areas, and a gradual doubling of the family tax credit, aiming to stimulate growth and reduce economic dependencies. Additionally, major investments in infrastructure and educational facilities underscore the Hungarian government’s focus on regional and economic development.
Blue-collar Hungarian workers between the ages of 17 and 25 will be eligible to borrow up to HUF 4m, interest-free, in the framework of a scheme to launch on 1 January 2025, Gergely Gulyás, the head of the Prime Minister’s Office, said at a weekly press briefing on Wednesday.
Borrowers must work at least 20 hours a week in Hungary to be eligible for the ten-year free-purpose loans, Gulyás said. Independent business owners and sole proprietors must certify income of at least the average wage for 20 hours a week, he added.
Eszter Vitályos and Gergely Gulyás at a Cabinet Briefing of the Hungarian government on 30 October 2024. Photo: MTI/Koszticsák Szilárd
Borrowers must pledge to work in Hungary for a period of five years, he said.
Repayments on the loans will be suspended for two years after the birth of the borrowers’ first child. After the birth of a second child, repayments will be suspended for a further two years and half of the principal will be forgiven. After the birth of a third child, the principal will be forgiven in full.
Gulyás: Government ‘waiting to see’ whether EPP can refute corruption allegations
The Hungarian government will be interested to see whether the European People’s Party will be able to refute the corruption allegations levelled at it in the press, Gulyás said. “We are interested to see whether the allegations are founded, and if the EPP is actually allowing corruption, not only within its ranks, but also in the European Parliament and with EU funding,” he said.
Hungarian government submits proposal to double family tax credit
The Hungarian government has submitted a proposal to double the tax allowance for families raising children, Gulyás said. The family tax credit is planned to be implemented in two steps, from July 1 next year and January 1, 2026, he said.
Gulyás: 2025 budget is ‘new economic policy budget’
Gulyás called the 2025 budget “the new economic policy budget” at a weekly press briefing on Wednesday.
Speaking during a break at a cabinet meeting, Gulyás noted that the budget contained measures in the recently announced economic policy action plan. Details of the 21 measures are being hammered out and anyone can weigh in on the most important matters in the National Consultation, a country-wide survey the Hungarian government is conducting, he said.
Lawmakers could take the final vote on the budget and the policy measures in the second half of December, he added. The Hungarian government targets economic growth of 3-6pc in 2025 and 2026, he said. The 2025 budget bill assumes 3.4pc GDP growth, according to “conservative estimates”, he added.
Gulyás noted that the BMW and BYD plants will begin production in Debrecen and Szeged, respectively, adding that these investments alone would generate verifiable growth.
He said macroeconomic data for the whole year, including the latest GDP data, showed the need for a new economic policy. He added that the Hungarian government’s policy of economic neutrality would weaken or even cease dependencies that influence Hungary’s economic growth.
He said real wage growth would reach 9-10 percent this year.
Gulyás said the cabinet had decided on the details of a blue-collar credit and a home renovation scheme in rural Hungary.
Blue-collar Hungarian workers between the ages of 17 and 25 will be eligible to borrow up to 4 million forints (EUR 9,900), interest-free, in the framework of the blue-collar credit scheme set to launch on January 1, 2025.
Borrowers must work at least 20 hours a week in Hungary to be eligible for the ten-year free-purpose loans, he said. Independent business owners and sole proprietors must certify income of at least the average wage for 20 hours a week, he added.
Borrowers must pledge to work in Hungary for a period of five years, he said.
Repayments on the loans will be suspended for two years after the birth of the borrowers’ first child. After the birth of a second child, repayments will be suspended for a further two years and half of the principal will be forgiven. After the birth of a third child, the principal will be forgiven in full.
Detailing the home renovation scheme, Gulyás said families with children in settlements with populations under 5,000 may apply for subsidies of at most 3 million forints to cover up to half of the cost of home renovation. They may also apply for another 3 million forints of subsidised mortgage credit.
On another subject, he said the Hungarian government has submitted a proposal to double the tax allowance for families raising children. The family tax credit is planned to be implemented in two steps, from July 1 next year and January 1, 2026, he added.
Meanwhile, Gulyás said he will accompany Prime Minister Viktor Orbán on a visit to Vienna on Thursday.
Eszter Vitályos, the government spokeswoman, said the Hungarian government’s investments with a combined value of around 8 billion forints have been completed over the last two weeks, including the construction and renovation of schools and kindergartens.
The value of transport development and road reconstruction projects came to 740 million forints, while 4.5 billion forints’ worth of municipal development projects have been completed, she said.
Gulyás: Fresh data justify need for new economic policy
Macroeconomic data for the whole year, including the latest GDP data, show the need for a new economic policy, Gulyás said. Gulyás said the Hungarian government’s policy of economic neutrality would weaken or even cease dependencies that influence Hungary’s economic growth. He added that real wage growth would reach 9-10pc this year.
Gulyás said the cabinet had decided on the support and conditions for a home renovation programme in settlements with populations under 5,000. Families with children in those settlements may apply for subsidies of at most HUF 3m to cover up to half of the cost of home renovation. They may also apply for another HUF 3m of subsidised mortgage credit.
Gulyás: Tisza represents EC, EPP position
The Tisza party represents the position of the European Commission and the European People’s Party “in exchange for support from Brussels”, Gulyás said. Responding to a question on the opposition party’s role in the European Union, Gergely Gulyás said that after the European parliamentary debate, there was “no question that Brussels openly wants to interfere in Hungarian domestic politics and that it also has a protege.” Gulyás said the “price” of its support was that whenever Hungarian interests went against that of the EC and EPP, Tisza would likely represent the stance of the latter “and interpret Hungarian interests flexibly”.
Gulyás: Tisza’s position against farmers ‘unacceptable’
Gulyás called it “unacceptable” that the opposition Tisza Party “has taken a position in Brussels contrary to the interests of Hungarian farmers”.
Answering a question at the press briefing, Gulyás said the European Union’s current system of direct agricultural subsidies was in line with Hungary’s interests, and the changes proposed by the European Commission were aimed at ensuring that “funds owed to Hungarian farmers should go to Ukraine instead”. “We’re unhappy that the European People’s Party is working against the interests of Hungarian farmers, but we find it expressly unacceptable if a Hungarian party does so,” the minister said.
The Hungarian government is launching a new economic consultation to engage the Hungarian people in shaping economic policies that address the needs of various social groups.
According to 24.hu, the consultation aims to improve financial stability for families, gradually raise wages, and strengthen the growth of small and medium-sized enterprises (SMEs) in Hungary. The consultation comprises 11 questions covering key issues such as economic independence, the business climate, housing, and pensions.
Source: Pixabay
The questions in the consultation
The initial questions address trade neutrality, which the government emphasises in light of recent sanctions from Brussels. It argues that maintaining autonomy in economic decision-making is essential for achieving growth rates above the EU average.
In terms of economic policy, the government proposes a clear path that not only incorporates EU recommendations but also balances Western and Eastern European economic models to create principles unique to Hungary. Support for SMEs is central to the consultation, as the government regards them as the engine of the domestic economy. Planned initiatives include direct capital support to help local businesses stabilise and compete with large global corporations.
Regulation of multinationals is another priority, as there are concerns that they often leverage their market power to set prices unilaterally. The government aims to ensure fair market practices to protect both the Hungarian economy and consumers.
The consultation also proposes updates to the wage increase programme, which the government believes will provide stable, predictable growth for workers. The aim is to achieve wage adjustments based on economic growth, with both minimum and average wages rising over time. New measures are also proposed for young people entering the labour market, such as interest-free loans to enhance financial stability early in their careers.
On housing, the government plans to offer tax incentives to companies that assist with employees’ housing costs. It also intends to expand support for young people by increasing housing allowances and building more dormitories, all backed by low-interest housing loans.
For the older population, the government intends to continue the thirteenth month of pension payments, despite differences with Brussels, to improve the financial security of Hungarian pensioners. Family support initiatives include increased child tax credits, which the government views as a more effective response to demographic challenges than Brussels’ migration-focused approach.
On migration, the government advocates an independent policy outside the EU’s current system, rejecting fines for non-participation and seeking to avoid migration penalties.
Previous consultations
The government’s national consultations have faced significant criticism in recent years. Opposition politicians, independent media, and many citizens argue that these consultations do not genuinely seek public input on substantial decisions. Past topics have included consultations on LGBTQ issues and migration. However, the government has notably refrained from holding national consultations on major projects like the Paks 2 nuclear power plant and the Budapest-Belgrade railway line.
The Hungarian forint has taken a new hit, falling to a record low against the euro following the release of disappointing GDP data. The data paints a bleak picture of Hungary’s economy, showing a slowdown that has once again tipped the nation into a technical recession. According to reports from Portfolio.hu, the euro reached HUF 405.8 by 9 AM today, a level unseen since November 2022.
The latest currency drop follows an overnight spike, where the euro-forint exchange briefly surged to 405.7, setting a fresh low not experienced since January 2023, Portfolio reports. The downturn in the forint coincides with the announcement of Hungary’s third-quarter GDP figures, which revealed an economic contraction and an official return to technical recession status. Analysts are bracing for further fluctuations as additional data from the EU and the U.S. are set to be released, likely impacting market dynamics. For instance, Spanish economic data already spurred a rise in the euro, which in turn saw the forint gain slightly against the dollar.
Shocking GDP data signals technical recession for Hungary
Data from Hungary’s Central Statistical Office confirmed a 0.7% quarterly drop in GDP during Q3, a contraction much steeper than experts had predicted. Forecasts collected by Portfoliosuggested only a minor dip of 0.2%.
However, the reality proved far worse, as Hungary’s economy has now experienced back-to-back quarters of decline, putting it squarely back in a technical recession.
On an annual basis, GDP shrank by 0.7% after seasonal and calendar adjustments, and the raw data showed a larger 0.8% decline. For comparison, analysts had expected a modest growth of around 0.3%.
The last time Hungary faced such economic difficulties was during the energy crisis of late 2022. Since then, GDP growth has been inconsistent, with the economy shrinking in six out of the last nine quarters.
Economic Development Minister Márton Nagy had hinted at the likelihood of this downturn, suggesting during the Budapest Economic Forum that third-quarter growth would hover close to zero. This statement from the minister implied an anticipated economic decline compared to the previous quarter, leading market forecasts to be adjusted downwards.
However, today’s release still managed to shock investors, triggering a further plunge for the forint.
Market reactions and fluctuations
Following the release of GDP figures, the forint experienced a sharp decline against the euro, reaching a low point of 405.8, marking a level not seen since late 2022. Amidst the broader landscape of European economic updates, fluctuations in the currency market were noticeable. For instance, Spain’s strong economic performance, along with an unexpected inflation increase in October, bolstered the euro. France also reported better-than-expected GDP figures, prompting optimism around a potential economic recovery in Europe. With the European economy showing signs of life, the European Central Bank may delay interest rate cuts, which could strengthen the euro further against the dollar.
These developments have caused the forint to strengthen slightly against the dollar, with a 0.2% rise bringing the exchange rate to below 374 HUF/USD. However, the forint’s position against the euro remains largely unchanged, reflecting investor caution due to Hungary’s weak economic outlook.
The Hungarian forint has plunged to its weakest rate against the euro since December 2022, sparking concern among economists. Experts attribute this downturn largely to international factors, including a volatile geopolitical environment, but domestic policies also play a part. The future of the forint may depend heavily on the release of EU funds, though there remains uncertainty about their arrival.
Sharp decline in the forint
The week started poorly for the forint, with the currency hitting a four-month low against the dollar and sliding to HUF 404 per euro by the weekend—the weakest level in nearly two years. Csaba Szajlai, an analyst at Világgazdaság, pointed out in an interview with ATV News that the upcoming U.S. presidential election could influence the euro-forint exchange rate, with a possible Donald Trump victory expected to weaken the euro, while a win by another candidate might stabilise it.
Economist Csaba Lentner sees Hungary’s ongoing financial struggles with the EU as a primary factor in the forint’s decline, along with the Hungarian National Bank’s current losses totalling around HUF 3,000 billion (EUR 7.40 billion). Lentner believes that Hungary’s absence of EU funding is adding pressure to the currency, stating that the weak Hungarian currency could test the resilience of the economy, especially as the 2026 elections approach. Given the current economic climate, he suggests that the forint could fall as low as HUF 430 per euro.
Trust issues at play
Opposition MP Zoltán Vajda of the MSZP party argues that the Hungarian currency’s persistent decline has deep roots, noting that since 2010, the currency has lost nearly 50% of its value against the euro. According to Vajda, government actions have eroded investor confidence, worsening the currency’s situation. He added that if Hungary had already adopted the euro, people would no longer need to worry about the forint’s day-to-day volatility.
While both global events and government financial policy are weighing on the currency, experts caution that only short-term measures might bring any stabilisation. In the long term, however, a more substantial recovery for the Hungarian currency remains uncertain.
UPDATE: EUR/HUF exchange rate reaches 405
The forint fell to a new low on the second day of the week, hitting 405.231 on Tuesday at around noon, Economx reported. It then went back below 405 then reached that level again after 2 PM.
The average gross hourly pay rate for blue-collar workers in Hungary climbed 13.1pc to HUF 2,098 in the third quarter from the same period a year earlier, an analysis by staffing company Trenkwalder and Moore Hungary shows.
Blue-collar wages on the rise
The hourly pay rate ranged between HUF 2,050 and 2,200 in most regions, but was under HUF 2,000 in the southwest of the country and was over HUF 2,900 in the capital.
The analysis was based on the wage data of close to 7,000 workers.
The gross hourly statutory minimum wage in Hungary stands at HUF 1,874 for skilled labourers and HUF 1,534 for unskilled workers.
Hungarian pharmaceutical company Gedeon Richter and US peer AbbVie on Thursday announced a new collaboration for the discovery and development of novel targets for neuropsychiatric conditions.
The collaboration expands on the success of nearly two decades of partnership on central nervous system products, such as cariprazine and the discovery of investigational drug candidate ABBV-932 for the treatment of bipolar depression and generalised anxiety disorder.
Under the terms of the agreement, the collaboration includes both preclinical and clinical R+D activities with shared financing by the parties. Richterwill receive an upfront cash payment of USD 25m, along with potential future development, regulatory and commercialisation milestones. Richter may also receive sales-based royalties. AbbViewill have worldwide commercialisation rights except for the traditional markets of Richter, including Europe, Russia, other CIS countries and Vietnam.
Read also:
Read the story of Gedeon Richter, the founder of the world-famous Hungarian pharmaceutical corporation HERE
The International Monetary Fund (IMF) forecasts the Hungarian economy will be a frontrunner in the European Union next year, the Finance Ministry said on Friday.
The IMF expects strengthening economic growth, falling inflation and persistently low unemployment in Hungary, Finance Minister Mihály Varga said after participating at the annual meetings of the IMF and the World Bank Group in Washington, D.C.
Hungary’s policy of economic neutrality can preserve the improving economic outlook in spite of the uncertain international environment, he added. The IMF puts Hungary’s GDP growth at 2.9pc in 2025, the fifth-highest projection among the 27 EU member states. Varga said the IMF acknowledged Hungary’s work-based economy and its efforts to gradually reduce its fiscal deficits and state debt levels.
Photo: facebook.com/szijjarto.peter.official
Fitch points to policy ‘trade-offs’ in Hungarian stimulus plan
Rating agency Fitch said an economic action plan recently unveiled by Hungary’s government contained policy compromises between economic growth and fiscal consolidation in an analysis published on Thursday. “Hungary’s recently announced new economic action plan highlights policy trade-offs between fiscal consolidation and the government’s commitment to social support and growth performance targets,” Fitchsaid.
“It is unclear if the proposals will strengthen growth prospects sufficiently to reduce challenges to medium-term fiscal consolidation – challenges that could increase should a recovery of external demand lag,” it added. The government’s plan aims to raise purchasing power, create affordable housing and develop SMEs. Fitch noted that the negative outlook on Hungary’s BBB sovereign rating reflected risks around the policy environment and the performance of public finances.
The recovery in economic activity following last year’s GDP contraction will be an “important driver” behind forecast deficit reduction over the next four years underpinning a recovery of budget revenue, it added. Fitch puts Hungary’s GDP growth at 3.4pc in 2025 and 3.5pc in 2026.
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After historic lows, Hungary’s forint faces possible further decline with today’s S&P credit rating – read more HERE
Hungarian ministry launchescampaign against webshops and courier companies
We have reported earlies that this week was not the heyday of the Hungarian forint. It happened before that the exchange rate increased above 400/EUR, but did not remain there permanently. Now, it seems the forint broke an important currency exchange level, and experts believe it can reach 410/EUR soon.
Hungarian forint broke exchange rate level
According to Index, external reasons like the price rise of gas resulted in a 10% weakening in the currency exchange rate of the Hungarian forint. Our currency was weaker against the euro in December 2022 and against the dollar in October 2023. On Saturday, Israel carried out attacks against Iran, which will probably make the situation worse. Currently, the exchange rate stands above 404/EUR.
Dániel Molnár, a senior analyst at Makronóm Institute, said the international atmosphere was the key reason behind the fall. The US dollar strengthened against the euro, which resulted in the weakening of the forint and the Czech koruna. Furthermore, the Hungarian National Bank did not increase the base interest rate on Tuesday. The MNB is in a reduction program but postponed base interest rate decrease for months, so the MNB did what it could to halt the negative trend.
György Matolcsy, the governor of the Hungarian National Bank. He will only intervene if a catastrophe happens. Photo: FB/MNB
The increasing probability of Trump’s success was also bad news for the forint since the American dollar is expected to strengthen due to the higher tariffs Trump promises. We covered the disadvantageous consequences of Trump’s victory on the Hungarian economy in THISarticle yesterday.
More disturbing news may emerge
According to Index, the forint changed its currency exchange level and is expected to remain in the 400-410/EUR range. Meanwhile, the US dollar will be in the 365-375 domain, Zoltán Varga, an analyst of Equilor Befektetési Ltd, said. Mr Varga added that the higher jobless rate the KSH shared on Friday was also disadvantageous for the forint.
Next week, multiple Hungarian and international economic data will emerge affecting the forint. For example, the Q3 Hungarian GDP growth data, the GDP increase of Germany, the USA and the Eurozone, the number of American employees employed in the private sector, the German inflation, the Japanese base interest rate, the Eurozone inflation data, etc.
S+P Global Ratings affirmed its ‘BBB-/A-3’ long- and short-term foreign and local currency sovereign credit ratings on Hungary in a scheduled review on Friday. The outlook is stable. In a statement released late Friday, the National Economy Ministry attributed the high degree of confidence in Hungary in the reports of all three big credit rating agencies to the stability and resilience of the economy. However, that news did not help the Hungarian forint. On Friday, when the news emerged, the exchange rate was below 404, now it is above.
New tendency: Hungarians keep their savings in euro
According to economx.hu, it is understandable why many Hungarians decide to keep their money in euros instead of forints. Apart from the psychological effect of seeing the 400/EUR exchange rate, the Orbán cabinet plans significant money transfers for the voters before the 2026 general elections. Furthermore, most EU funds are still unavailable for Hungary, and it does not seem the Hungarian government will agree with the European Commission and settle the controversial issues soon.
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Minister talks about the Hungarian economy’s future: 3-4% GDP growth, SME program, strict rules for Airbnb, rentals – read more HERE
Orbán cabinet introducesstricter rules on guest worker employment
S&P is set to announce Hungary’s credit rating late tonight, a decision that could exacerbate the downward trend of the forint. On 23 October, the Hungarian currency reached a 22-month low against the euro, a position it has struggled to recover from since. The last time the forint was this weak was back in January 2023.
Could Trump’s defeat aid the forint?
The forint has proven vulnerable to external shocks, with recent pressures arising partly from the U.S. presidential election campaign, according to portfolio.hu. The campaign’s impact on emerging markets has put additional pressure on the currency, but interestingly, a Democratic victory could potentially ease this strain on the forint.
Interestingly, a Democratic victory in Washington could help the forint recover from its current downturn. However, the Hungarian government has placed all its bets on a Trump victory. Prime Minister Orbán and his cabinet hope that a Trump presidency could alleviate the pressure from some Western powers on Hungary regarding the war in Ukraine and the illegal migration crisis. Orbán frequently asserts that Trump would bring peace to Ukraine, which would help the Hungarian economy flourish once again.
On the other hand, the Hungarian PM rarely mentions Trump’s anti-China policies, which could lead to clashes between Budapest and Washington. The Hungarian government is actively working to establish, maintain, and expand its relations with China in various areas, including education, the economy, railway upgrades, and even financing Hungary’s growing debt.
Viktor Orbán and Chinese President Xi Jinping. Photo: FB/Orbán
Conversely, a Republican victory in both Congress and the White House could lead to a stronger U.S. dollar, presenting new challenges for the Hungarian currency.
Can the Hungarian National Bank (MNB) stabilise the forint?
The Hungarian National Bank has pledged to keep the base interest rate steady for at least the next three months in an effort to support the Hungarian currency. Portfolio.hu suggests that further intervention from the MNB may only occur if the forint weakens uncontrollably. Some analysts predict the forint could strengthen to around 400/EUR by year-end, but a sustained softening is anticipated for 2025, with the exchange rate likely remaining above this threshold.
György Matolcsy, the governor of the Hungarian National Bank. His term will end in early-2025. Photo: FB/MNB
The forint’s decline is partly due to Hungary’s sluggish GDP growth and ongoing delays in receiving EU funds. Poland’s zloty, though also under pressure, has held steadier due to Poland’s stronger growth and EU financial support.
Will S&P retain Hungary’s investment-grade status?
According to Portfolio.hu, S&P is likely to maintain Hungary’s investment-grade rating with a stable outlook, following a similar move by Japan’s R&I on 22 October.
The forint traded at 404.22 to the euro around 10:00 on Friday morning, weakening from 402.78 late on Thursday. The current exchange rate stands at 403.75. The forint also eased to 373.50 from 372.92 against the dollar and slipped to 431.24 from 430.31 against the Swiss franc.
In June, all three major credit rating agencies—Fitch, Moody’s, and Scope Ratings—maintained Hungary’s position in the investment grade category.
Photo: Daily News Hungary
UPDATE: Euro above 404
The forint traded at 404.08 to the euro around 5:30 in the evening on Friday, slipping from 402.78 late Thursday. The forint eased to 373.44 from 372.92 against the dollar. It weakened to 431.12 from 430.31 to the Swiss franc.
UPDATE 2: S&P decision and reactions
S+P Global Ratings affirmed its ‘BBB-/A-3’ long- and short-term foreign and local currency sovereign credit ratings on Hungary in a scheduled review on Friday. The outlook is stable. However, the positive news did not help the forint. On Saturday morning, the exchange rate is still 403.92/EUR.
“The stable outlook reflects our expectation that Hungary’s economic recovery, ongoing disinflation, and stabilising cost of debt will support the government’s fiscal consolidation efforts in the medium term, allowing the government’s debt burden…to stabilise,” the rating agency said.
S+P sees Hungary’s fiscal deficits narrowing from 2025 and averaging 3.7pc of GDP through 2027, taking into consideration strengthening economic prospects and active consolidation measures totaling about 1.3pc of GDP for 2024.
S+P expects Hungary’s state debt ratio to reach 74.6pc of GDP in 2024 and projects interest spending to represent 9pc of government revenue on average over 2025-2027.
S+P’s baseline expectation is for inflation to continue to subside and the current account to remain in modest surpluses, allowing the National Bank of Hungary to cautiously normalise monetary policy.
S+P puts GDP growth at 1.6pc in 2024, before accelerating to around 3.0pc in 2025 as investment growth and external demand recover, alongside “enduring private consumption”.
S+P said the growth outlook remained “somewhat uncertain” as the country’s open and trade-intensive economy remained susceptible to external developments, including growth performance in Germany, Hungary’s key trading partner, as well as any spill-over effects from geopolitical tensions on energy or other key import prices.
Hungary’s constrained relations with the EU could also lead to delayed disbursement of associated funding, it added.
Hungary has access to a total of EUR 12.2bn of cohesion funds for the EU’s 2021-2027 funding cycle.
FDI as a share of total investments is expected to pick up on big projects in the electric vehicle sector, S+P said.
In a statement released late Friday, the National Economy Ministry attributed the high degree of confidence in Hungary in the reports of all three big credit rating agencies to the stability and resilience of the economy.
The economy is growing faster than the European Union average and beating economic performance in Belgium, France, Italy, the Netherlands, Romania, Latvia and even Germany, the ministry said.
Hungary has moved past a difficult period and positive signs point to an economic turnaround, it added.
GDP growth is expected to reach 1.5pc in 2024, the ministry said, pointing to improving retail sales and tourism data, indicating growing consumption. The recovery of the domestic economy is supported by high employment, a dynamic increase in real wages and low inflation, it added.
The government aims to boost GDP growth to 3-6pc, adopting a policy of economic neutrality and rolling out a new economic policy action plan that aims to boost purchasing power, ensure affordable housing and upscale SMEs, the ministry said.
The 21 measures could lift GDP growth over 3pc in Q1 2025, it added.
In a post on social media late Friday, Finance Minister Mihaly Varga noted that Hungary’s sovereign rating had been reviewed by credit rating agencies close to 20 times since the outbreak of the war in Ukraine. Each time the agencies have established that the economy is resilient and the conditions for growth are in place, putting Hungary in the investment grade category, he added.
Hungary’s economy is returning to the path of sustained growth it was on before the pandemic, he said.
Read also:
Forint plummets to over 403 against euro, hitting 2-year low – read more HERE
Hungary’s minimum wage could realistically reach EUR 1,000 by 2028, saysemployment secretary
Sándor Czomba, the state secretary for employment policy, said there was a “realistic chance” for the minimum wage to reach EUR 1,000/month and the average gross wage to climb to HUF 1 million/month by 2028, speaking on public television on Thursday.
Czomba told news channel M1 that the targets could be reached if GDP growth accelerated and inflation stayed predictably low. He added that talks between the government, employers, and unions about next year’s minimum wage increase and wage developments for the coming three years were continuing.
The government aims to raise the minimum wage to 50pc of the level of the average wage, excluding bonuses, in 2027, he said. That would bring the minimum wage to HUF 370,000-375,000/month, according to calculations at present, he added.
Achieving that level would require annual increases of 12pc, although the exact scale of the rise would depend on GDP growth, he said, adding that consensus between the sides had been reached on that point.
The government expects GDP to grow 3-4pc in 2025 and 4-5pc in 2026, he said.
The Monetary Council of the National Bank of Hungary (NBH) decided to leave the central bank base unchanged at 6.50pc at a monthly policy meeting on Tuesday.
At the previous policy meeting, in September, the Council had cut the rate by 25bp. The Council also left the O/N deposit rate at 5.50pc and the O/N collateralised loan rate at 7.50pc. The rates mark the ends of the central bank’s symmetric interest rate corridor. In a statement released after the meeting, the Council said the domestic inflation outlook was consistent with the projection in the NBH’s latest quarterly Inflation Report, published in September, but pointed to an increase in upside risks to inflation on the back of deteriorating international investor sentiment and volatile commodity prices.
“Re-intensifying geopolitical tensions, volatile financial market developments and the risks to the outlook for inflation warrant a pause in cutting interest rates,” the policy makers said. “The external interest rate environment may ease more slowly than previously expected, while the expected interest rate paths of the world’s leading central banks are still surrounded by uncertainty,” they added. Looking ahead, the Council said a “careful and patient approach” to monetary policy was still warranted and decisions on the base rate would be taken in a “cautious and data-driven manner”.
Forint strengthens after the decision
The decision of the Monetary Council did not come as a surprise: after the words of Barnabás Virág, Vice President in charge of Monetary Policy, it was certain that interest rates would be kept on hold, Portfolio writes. Nevertheless, the forint reacted to the announcement by strengthening to around 400/EUR.
The average gross wage in Hungary rose 13.1pc year-on-year to HUF 628,800 (EUR 1,568) in August, according to data released by the Central Statistics Office (KSH) on Tuesday.
Net wages climbed at the same pace to HUF 418,100. Real wages rose 9.4pc, calculating with August CPI of 3.4pc. The gross median wage increased by 15.6pc to HUF 520,000, KSH reported. Hungary’s statutory monthly minimum wage was raised by 15pc to HUF 266,800 for unskilled labourers and by 10pc to HUF 326,000 for skilled workers from December 1.
Excluding Hungarians working full-time in fostered work programmes — who earned an average gross of HUF 132,500 in August — the average gross monthly wage was HUF 639,200. The average gross wage in the business sector, which includes state-owned companies, rose 12.5pc to HUF 633,100. The average gross wage in the public sector climbed 14.4pc to HUF 609,200.
In the non-profit sector, the average gross wage increased 15.8pc to HUF 641,600. For the period January-August, gross wages averaged HUF 634,300 and net wages came to HUF 421,800, both up 13.9pc from the same period a year earlier.
Commenting on the fresh data, Sándor Czomba, the state secretary for employment policy, said real wages had climbed continuously for a year, while employment rose. Since 2010, the average paycheque has tripled, while 1 million more people are working, he added. He noted that boosting the purchasing power of working Hungarians was a pillar of the government’s recently unveiled economic policy action plan.
Related measures include the launch of a credit scheme for young blue-collar workers, the doubling of tax preferences for families with children, and a three-year wage agreement between employers and unions. The government targets a monthly minimum wage of EUR 1,000 by 2028, while the average wage climbs to HUF 1 million, he added. Czomba said economic growth was a condition for accelerated wage growth.
The national economy minister has instructed the consumer protection authority to step up probes of webshops and courier companies in light of the large number of complaints, the ministry said on Friday. The National Economy Ministry and the Consumer Protection Authority are primarily investigating compliance with information and complaint handling obligations to ensure that Hungarian families are not harmed when ordering online.
According to the statement, government agencies acting in their capacity as consumer protection authorities have received numerous complaints about delivery problems related to products ordered online. While some parcels have not been delivered to customers for weeks, customer services are often unavailable or complaints are not handled properly, causing serious harm to a wide range of consumers.
The ministrynoted that nearly 300 probes were conducted of webshops and courier companies in the first half of the year, resulting in almost HUF 70 million (EUR 175,000) of penalties.
Admitting Ukraine to NATO would cross a Hungarian “red line” since this would lead to a third world war, the foreign minister said, briefing parliament’s foreign affairs committee on Thursday.
Ukraine’s NATO accession is crossing “red line”
The accession of Ukraine at war would lead to a direct confrontation between Russia and the alliance, Péter Szijjártó, said in response to MPs’ questions.
Several allies had encouraged Ukraine to believe in its prospective NATO membership, which he called “a humiliation of Ukraine” since in closed NATO sessions it was generally agreed that “this is not possible”.
Meanwhile, he said Hungary opposed military advisers from the European Union in Ukraine because sending them would lead to escalation.
Péter Szijjártó. Photo: MTI
Also, he said Hungary rejected extending the review period of the sanctions against the Central Bank of Russia from six months to three years, because doing so would raise public expectations of a never-ending war “which we find unacceptable”.
The USA continues to trade with Russia
When it comes to punitive measures that may harm national interests, Hungary objects to sanctions on, for example, natural gas and nuclear fuel, adding that many slammed Hungary in this regard, yet European imports of Russian liquefied natural gas (LNG) had grown by 11 percent in the first half of the year, while France alone had increased Russian LNG import volume by 110 percent.
Regarding Russian crude, he said Hungary vetoed the EU measure to ban crude imports, and Hungary, Slovakia and Czechia had won an exemption accordingly. Meanwhile, India, “if I recall correctly”, increased Russian crude oil imports twenty-fold, while Europe’s oil imports from India had tripled, he added.
Last year, Szijjártó said, the US continued to rely on Russian supplies of uranium, yet Hungary was accused of being pro-Russian in light of the project to expand its Paks nuclear power plant in which US, German, French, and Austrian subcontractors worked alongside Russian nuclear contractor Rosatom.
The primary goals of Hungary’s foreign policy are to promote peace, protect national sovereignty and preserve the country’s economic neutrality, Szijjártó said. Speaking at a hearing of parliament’s foreign affairs committee, Szijjártó said Hungary had been paying the price of the war raging in Ukraine for two and a half years.
“After a thousand days, the European political elite should realise that the question is not what we think about the war, because everyone knows that exactly; the question is how to ensure peace, or more precisely, which path will lead to peace the fastest,” he said. The minister said the pro-war stance followed so far had failed, and weapons deliveries had not brought the end of the conflict closer, so it would be time to give pro-peace policy a chance in order to avoid escalation and a direct confrontation between NATO and Russia.
He insisted that outside of the “transatlantic bubble”, pro-peace forces were in the majority, and Hungary was also part of this majority, even if those who held this position were called “Putin’s puppets or Kremlin propagandists” in Europe. Szijjártó went on to point to what he considered attempts to limit national sovereignty in many parts of the world, including Hungary.
The EU wants to say who and how should govern in Hungary
“Last week, we all had the chance to watch the debate in the European Parliament in Strasbourg, where the wish of who should be in government, who and how should govern in Hungary, was expressed more clearly and more shamelessly than ever before,” he said. “I believe that such an attempt at open intervention is unprecedented, even in the recent history of European politics, and must be rejected as firmly as possible. It is not up to international political actors, Manfred Weber or Ursula von der Leyen, to decide who governs in Hungary, but Hungarian voters,” Szijjártó added.
Finally, the minister touched on the issue of trade neutrality, reiterating that Hungary was against the formation of blocs and against launching a new trade “cold” war. Instead, was is interested in connectivity and creating trade ties, he said. He cited Hungary as an example of the growth potential held by civilised East-West cooperation, insisting the country had become a key hub for Eastern and Western economies thanks to its “pragmatic, patriotic foreign policy”.
Foreign minister presented economic neutrality policy to WTO deputy DG
Szijjártó presented the Hungarian government’s strategy of economic neutrality to World Trade Organization (WTO) Deputy Director-General Xiangchen Zhang in Geneva on Wednesday, his ministry said in a statement. In a post on social media after the meeting, Szijjártó said some of the biggest players in global politics and world trade had taken decisions that could lead to the outbreak of an “economic cold war”.
“This flies in the face of Hungary’s interests. The Hungarian economy is export-oriented, Hungarian companies are competitive at the international level, and their export performance is increasing from year to year, so it is in Hungary’s interest for world trade and the global economy to operate without impediment,” he added. “We have shown in recent years how much we can profit from a civilised cooperation between East and West,” he said, adding that Hungary had become a “meeting point” for investments from the East and West.
He pointed to the “unhindered cooperation” between German and Chinese automotive industry companies in Hungary and said the success of entire European economies depended on such cooperation. Szijjártó said the WTO deputy director-general had approved of Hungary’s strategy of economic neutrality, calling it “the right way”. That strategy produces economic growth, creates jobs and higher wages, Szijjártó added.
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PHOTOS showPM Orbán was key figure in first, ‘historic’ meeting of Patriots for Europe, demanded peace talks
The Hungarian forint is at a 4-month low against the American dollar. The exchange rate stands around 370/USD these days. The last time it was that high was in June. What can we expect? Will the euro continue to strengthen as well?
Hungarian forint struggling against euro, dollar
The Hungarian forint started a weakening period again in the last few weeks. The EUR/HUF currency exchange rate is slowly but unstoppably climbing again. Even though the EU’s official currency was at a one-year low on 26 May at 384.39/EUR, it is above 400/EUR again, and it seems we have to get used to that exchange rate. The forint has been around 400 since the beginning of this month.
The trend is the same concerning the American dollar. Despite being at a 6-month low in August and September, the American currency reached a 4-month high in October with HUF 368-370/USD. The American dollar peaked in June and April, with exchange rates above 370/USD. In January, we only had to pay HUF 344.7 for a dollar.
Forint-USD. Photo: PrtScr/Google
Forint-euro. Photo: PrtScr/Google
According to the MTI, the forint traded at 400.05 to the euro around 10:00 in the morning on Friday, little changed from its rate of 400.23 late Thursday. The forint edged up to 369.07 from 369.33 against the dollar. It firmed to 425.81 from 427.10 to the Swiss franc.
Hungary’s risk remains high
Barnabás Virág, the deputy governor of the Hungarian National Bank, said at the annual conference of Portfolio yesterday that the American economy was in unexpectedly good shape. Therefore, the FED can introduce a moderate interest rate reduction course. The result is a strengthening dollar against the euro, which is bad news for emerging currencies like the forint.
Meanwhile, Hungary’s risk margin increased compared to the second half of the 2010s. Our risk margin is higher by 140 base points than it was then. Risk evasion from investors is strengthening, and geopolitical conflicts are escalating, which is not good news for emerging markets like Hungary because investors move their money to the safest currency in the world, the American dollar. If the USA gets involved in one of the conflicts, the EUR/HUF exchange rate can easily exceed the 410 level, hvg.hu wrote.
Will the weakening of the forint continue? Photo: Pexels
Sometimes even a well-formed sentence is enough
Mr Virág added that the Hungarian National Bank might keep its base interest rate decrease programme halted even after October. That statement helped the forint to strengthen from 402/EUR to 400/EUR.
The forint is in bad shape even compared to regional currencies
HVG tried to explain why the forint has lost so much of its value compared to other regional currencies (Polish zloty, Czech koruna, etc.) since 2004. They shared two shocking pieces of data as an introduction. When Hungary joined the European Union (1 May 2004), we had to pay HUF 250 for one euro. Currently, that exchange rate is 400, which means it lost 60% of its value.
Meanwhile, Czechia’s koruna strengthened. In 2004, they paid 32 koruna for one euro. Now, the exchange rate is only 25.3. Comparing the Hungarian currency with the koruna is even more shocking. In May 2004, a Czech koruna cost 7.74 forint, while now we have to pay 15.86. That is a more than 100% weakening.
High state debt, Orbán’s supermajorities, huge state investments
One of the reasons is the high Hungarian state debt and the fact that 30% of it is in foreign currency. If the forint weakens, our state debt grows instantly. For example, compared to H2 2023, the Hungarian state debt grew by HUF 504.1 billion in H1 2024.
Another reason is the government’s already announced pre-election money transfers. In 2022, the Orbán cabinet generated Europe’s biggest inflation by distributing thousands of billions of forint, gaining the fourth consecutive supermajority. Péter Magyar’s Tisza Party is just 2% behind Fidesz. Therefore, the Orbán government may prepare an even more significant money transfer before the elections in 2026.
Investing in Hungary is even higher because of the huge investments of the Orbán regime, like buying Budapest Airport or building the Belgrade-Budapest railway line.
New budget only after US presidential elections
The Hungarian government regularly says the weak forint boosts the exports and the economy. However, HVG argues that its disadvantages are far greater than its advantages.
The Orbán government places the country’s diplomatic and economic future in Trump’s victory in the November presidential election. For example, the government will only submit the 2025 budget after the election. In the last 14 years, annual budget bills were always submitted the previous May. That meant, of course, that the government regularly amended the budget since the 2025 budget accepted by the parliament e.g. in May 2014 needed several modifications in the next year.
Hungary’s future is highly dependent on Trump’s victory in November. Photo: FB/Orbán
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Government measures in the coming years will be determined by the three pillars of the government’s new economic policy, National Economy Minister Márton Nagy said at the Portfolio Budapest Economic Forum 2024 conference on Thursday.
25k new homes per year
Nagy noted that the three pillars of the new policy, approved at a cabinet meeting earlier in the week, were ensuring affordable housing, boosting the purchasing power of working Hungarians, and supporting SMEs with the launch of the Demján Sándor programme.
Nagy said Hungary’s third-quarter GDP would underperform the market consensus, coming in around zero, and put full-year growth under 1.5pc. He added that growth could climb over 3pc in Q1 2025, then move in a 3-4pc range.
Nagy said construction of “at least 25,000” homes a year was a “realistic goal”, as were “affordable” home prices and rental rates. He stressed that home mortgage rates had to be brought under 5pc, adding that there was nothing to stop runaway “home inflation”.
GDP growth will be between 3 and 6% in 2025, Márton Nagy says. Photo: MTI
He said the capital was in the midst of a “housing crisis” in which young people had to pay over 50pc or 60pc of their income for rent. He added that the government had to intervene because local councils had not resolved the issue.
Tax increase on Airbnb-type activity
He noted that regulation of short-term rentals had been in the hands of the metropolitan council and district councils, but no measures had been taken.
Nagy said the government planned to announce a two-year moratorium on licences for short-term rentals in the capital, while raising the tax on Airbnb-type activity by a factor of “four or five”.
The government also wants to ensure there are enough dormitory rooms, even though that should be the task of universities, he added.
He said raising the minimum wage to a monthly EUR 1,000 and the average wage to HUF 1 million by 2028 was achievable if wage increases could be based on economic growth.
Significant wage rise for everybody. Photo: MTI
Nagy said the details of a credit scheme for young blue-collar workers were being drafted. He added that the interest-free credit would be capped at HUF 4m.
He said the Demjan Sandor Programme aimed to double the revenue or balance sheets of SMEs. He added that an important goal was doubling the share of Hungarian-owned SMEs in exports, while upgrading their digital accessibility and easing their access to credit.
Orbán cabinet drafting 2025 budget with ‘improved outlooks’
The government is drafting the 2025 budget with “improved outlooks”, Finance Minister Mihály Varga said at the Portfolio Budapest Economic Forum 2024 conference on Thursday. Varga said the government assumed GDP growth of 3.4pc, a 4.3pc increase in consumption and 5-5.5pc higher investment volume in 2025. He added that there were no plans to introduce new taxes, noting that announcements had already been made on phasing out windfall profit taxes on airlines, pharmaceutical companies and telcos. The government calculates with gross wage growth of 8.6pc next year, while it sees retail sales climbing 4-4.5pc.
Varga said the improving primary fiscal balance would be an important condition, adding that interest expenditures would fall in 2025, from 4.9pc to 3.8pc of GDP. The government aims to bring the general government deficit under 3pc of GDP in the coming years and targets a 4.5pc gap in 2024, 3.7pc in 2025 and 2.9pc in 2026, he added. Touching on debt management, he said the aim was to keep 50pc of state debt with institutional investors and raise the share with retail investors to 25pc, while adopting a 25pc threshold for external exposure. He added that the share of debt with retail investors stood at 21pc at present, while the share of FX debt had fallen under 29pc from 53pc in 2010.
Growing household savings point to an increase in consumption, investments and borrowing in the coming years, he said. He added that consumption, climbing on the back of real wage growth, would be an engine of growth in 2025. He added that the launch of big projects would bring investments out of negative territory. Varga said a smaller deficit would support growth, as well as targeted economic and labour market development programmes.
Economic success requires confidence, cooperation
There can be no economic success without confidence and cooperation, Finance Minister Mihaly Vara said at an awards ceremony at the Vigado in Budapest late Wednesday. Vargasaid confidence and cooperation had allowed Hungary’s economy to triple in size, at current prices, and grow 42pc, in real terms, since 2010. He added that 1 million new jobs had been created, while wages, adjusted for inflation, had climbed by more than 50pc.
Varga acknowledged the unfavourable external environment and said Hungary’s economy could grow 1-1.5pc this year. Next year, the European Commission also expects Hungary’s GDP growth to reach 3-3.5pc, he added. Consultancy EY Magyarorszag presented its EY Entrepreneur Of The Year award to Eva Hegedus, the co-founder and chairman-CEO of Granit Bank. She will represent Hungary at the World Entrepreneur Of The Year awards in Monaco in 2025.
EY Magyarország CEO Tamás Vékási said the awards acknowledged entrepreneurs who worked not only for their own success, but for the future of the economy and society, too.
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Attention! Orbán cabinet introduces stricter rules on guest worker employment – read more HERE
The new measures the Orbán cabinet introduces would like to help the employment of the Hungarian workforce in Hungary. For example, employers in Hungary can no longer hire guest workers from third countries if authorities prove that they refused to give a job to Hungarian job seekers due to unsupported claims. The new measure’s aim is to baulk favouring guest worker employment in Hungary.
A guest worker can only be employed if suitable Hungarian job seekers do not apply for the job
According to Szabad Európa, the new rules were published in a government decree dealing with several other issues. There are three key tightenings concerning third-country job seekers and their employers in Hungary.
First, employers punished with administrative or OSHA fines in the previous 12 months cannot hire a guest worker. Secondly, they cannot hire a guest worker from a third country if they were punished for illegally employing guest workers before. Finally, employers under compulsory liquidation, and forced strike-off cannot hire a guest worker.
If a Hungarian employer rejects to hire a Hungarian job seeker because of unsupported claims, they should expect sanctions.
UPDATE: Almost 130 thousand third country foreign workers in Hungary
Guest workers may only fill positions in Hungary that can’t be taken by Hungarians, Minister of Foreign Affairs and Trade Péter Szijjártó said at a hearing before a parliamentary committee on Thursday. Szijjártó dismissed suggestions that guest workers were taking jobs away from Hungarians at the hearing before the foreign affairs committee, his ministry said. He noted that there were 128,000 workers from countries outside of the European Union in Hungary at present, while the number of unfilled positions stood at 71,000.
He added that investments were only eligible for state support if a majority of Hungarians were employed in their implementation or attempts had been made to hire locals for all available positions. Szijjártó said guest workers accounted for just 2.6pc of the employed in Hungary, under the rates of 3.8pc in Slovakia, 6.4pc in Poland and 17pc in Czechia. Addressing other questions, he said the government’s economic strategy was not based “solely” on battery manufacturing investments, but added that the electromobility transition was necessary to meet environmental targets.
Hungary has the fourth-largest battery manufacturing capacity in the world at present and could move into second place after investments in the pipeline are completed, he said.
Government clears new economic policy action plan
Hungary’s government has approved a new economic policy action plan that uses new solutions and new policy tools to adapt to changed circumstances, the National Economy Ministry saidon Wednesday.
Adopting a policy of economic neutrality is the only way to ensure Hungary the chance to boost its GDP growth to 3-6pc in 2025, the ministry said. The government aims for the broadest possible participation in the economic upturn, especially for families, microbusinesses and SMEs, it added.
PrtScr/ATVnews
The new economic policy aims to increase the purchasing power of working Hungarians, ensure affordable housing and scale up businesses with the launch of the Demján Sándor Programme, the ministry said.
Significant wage rise in cooperation with the employers
Measures affecting incomes include a three-year agreement between employers and unions on minimum wage increases, the launch of a credit scheme for young blue-collar workers, and the doubling—in two steps—of the tax preference for families with children.
Among the affordable housing measures, tighter regulation of short-term rentals, a review of rental rates and contract conditions, and the addition of dormitory rooms are targeted at the capital. Broader measures include the establishment of a home programme for young Hungarians, the launch of a home renovation scheme for smaller settlements, a temporary rule allowing up to half of SZÉP voucher card spending to be used for home renovation, a temporary provision on use of voluntary pension fund savings for home purchase and renovation, tax preferences for employer contributions to home purchases, the extension of the 5pc preferential VAT rate on home purchases until the end of 2026 and a 5pc voluntary cap on mortgage rates with the cooperation of the banking sector.
Measures that aim to double the size of Hungarian SMEs include a capital financing programme, a scheme to promote investments at SMEs, a programme to ensure all businesses have their own homepage, a reduction of the rate on Szechenyi Card credit to 3.5pc, the start of a credit programme by Magyar Eximbank to boost exports, the acceleration of European Union programmes for SMEs and a reduction in administration for SMEs with the raising of the threshold for mandatory auditing.
Restarting growth goal of economic policy, says the Orbán government
Restarting growth is the main goal of the government’s economic policy this year, Richárd Szabados, the state secretary for SMEs, said at a conference on Wednesday. Support for the recovery of household consumption, promoting domestic production and investment, and stepping up labour market activity are pillars of restarting economic growth, Szabados said at the Infoter conference in Balatonfüred. SMEs need to be strengthened to achieve 3-6pc GDP growth in 2025, he added.
He noted that eight of the 21 measures in the government’s new economic policy action plan unveiled earlier on Wednesday affected SMEs. He pointed to the need for more export-capable Hungarian-owned SMEs, noting that just 30,000 of the 900,000 SMEs in the country were exporters and the majority of those were foreign-owned. Touching on the EU’s AI Act, Szabados said the regulations were expected to have a positive impact, but added that their implementation couldn’t involve too much red tape.
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