Government plans to raise the monthly minimum wage to EUR 1,000 and the average wage to HUF 1 million by 2028 can only be “realistic” if businesses get support and their tax burden is eased, entrepreneur and employer association VOSZ said in a statement issued on Tuesday.
VOSZalso said wage increases needed to be linked to economic growth, inflation and productivity indicators.
VOSZsaid it backed a tiered minimum wage system that took into consideration the particularities of various business sectors to replace the uniform minimum wage for skilled labourers.
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PM Orbán announced big plans concerning Hungarian econom, says he is ready to fight – read more HERE
The 2024 summer season exceeded all expectations in Hungarian tourism, largely boosted by the increased number of foreign tourists. Between June and August, Hungary saw a 14 percent increase in the number of foreign visitors, with more than 3 million international tourists spending nearly 8 million nights in Hungarian accommodations.
As reported by Lelépő, more than 1.7 million tourists visited the Hungarian capital, Budapest, in the summer of 2024. To put this number into perspective: more than half of of all overnight stays booked by foreign tourists have been registered in Budapest which made the capital stand out not only in terms of the number of visitors but also in terms of total revenue. International visitors produced the overwhelming majority of hotel revenues: 90 percent, or almost HUF 103 billion (more than EUR 256 million).
Rural hotels and other accommodation providers also performed well, especially in spa towns and around Lake Balaton. 1.4 million foreign tourists visited Hungary outside the capital, generating nearly 4 million overnight stays and HUF 67 billion (almost EUR 167 million) of revenue, which is a 13 percent increase outside Budapest and 15 percent around Lake Balaton.
Swans in Lake Balaton near Siófok, Hungary. Photo: depositphotos.com
Most tourists came from Germany, Poland, Czechia, Slovakia, and the United Kingdom. The number of British and Slovakian tourists increased by 9 percent each compared to the previous year, while the number of Chinese visitors doubled in the same period.
The successful summer season underlines the importance of tourism in the economy of Hungary, as revenues generated by the sector account for 12 percent of the country’s GDP. According to Olivér Csendes, CEO of Visit Hungary, the successful summer season is significant not only in terms of immediate results but also in terms of annual tourism turnover, as almost 37 percent of annual foreign overnight stays are generated in the summer period.
These were the most popular destinations among foreign tourists
Outside the capital, Lake Balaton, Bük-Sárvár, and the Mátra-Bükk regions, Debrecen (the second largest city in Hungary), Siófok, Hajdúszoboszló, and Hévíz (three of the most popular towns by Lake Balaton) attracted the most visitors.
On an annual basis, one of the most important sectors for the Hungarian economy recorded its biggest decline so far this year in August.The construction sector was not at its best either. Here are the facts, according to the State Statistics Office, on the economic decline:
Hungary’s construction sector output falls 6.0pc in August
The output of the building segment slipped by 3.2 pc, and civil engineering output dropped by 10.2 pc.
In August, the construction sector’s output reached HUF 614bn, with the building segment accounting for 63% of the total.
In a month-on-month comparison, construction sector output edged down 2.1pc, adjusted for seasonal and workday effects.
Order stock was 22.8pc higher at the end of August than twelve months earlier. Buildings segment orders fell 5.8pc, but civil engineering orders rose 51.4pc.
New orders fell 19.6 percent during the period. New orders in the buildings segment dropped 27.1 percent, and new civil engineering orders declined 11.1 percent.
For January-August, construction sector output rose 1.8pc from the same period a year earlier.
The detailed data show that the output of the automotive industry, Hungary’s most significant manufacturing sector, fell 12.4 percent year-on-year in August. The segment accounted for 23pc of manufacturing output during the month.
The output of the electrical equipment segment, which comprised 11pc of manufacturing output, declined to 15.7pc.
The output of the computer, electronics, and optical equipment segment, which accounts for close to 10 percent of manufacturing, contracted 13.2 percent.
The output of the food, drinks, and tobacco segment, which made up 16 percent of the manufacturing sector’s output, edged down 0.2 percent.
Adjusted for the number of workdays — of which there were two fewer than in the base period — headline output fell 4.1pc.
In a month-on-month comparison, output slipped 0.5pc on a seasonally- and workday-adjusted basis.
For the period January-August, industrial output declined 3.8pc year-on-year.
Successful economy, the government says
Fidesz parliamentary group leader Máté Kocsis said on Monday that
Hungary’s economic prospects are “good.”
He said it was time for a new national conciliation to ensure that the proposed new measures would further strengthen the economy and people’s welfare.
Experience shows that the National Consultation will once again consume billions of forints. Fidesz will still only be able to appeal to its own voter base, which is only one-fifth of the citizens who vote. Moreover, the questions and answers that are being directed now suggest that it is possible to be trade neutral as a member of the EU. Details here.
Mate Kocsis, the ruling party’s group leader, said on Monday that Fidesz proposes holding a “National Consultation” public survey on “trade neutrality, support for small and medium-sized enterprises, wage increases, employee loans, as well as housing and family support.”
Given the economic upheavals following the pandemic and the war, new economic solutions were needed to put the country back on the right track, he said during a break of the two-day Fidesz-Christian Democrat group meeting in Esztergom, in northern Hungary.
Hungary’s economic outlook “is good”, he said, adding that the proposed new measures would further strengthen the economy and people’s prosperity.
At the same time, “the European leadership is waging a trade cold war,” isolating itself from the East’s economies, he said, adding that “Hungarian neutrality” was best served by openness towards both East and West and that it should break off trade ties neither with the West nor the East.
Kocsis said Fidesz believed in the government’s policy outlook, but it always sought the public’s views on sensitive issues.
Kocsis said the public must have a say on whether they concur with “the economic isolation represented by the Brussels leadership” or whether they want to maintain “free-flowing Eastern and Western commercial and economic pathways.”
They should also be asked about support for small and medium-sized enterprises (SMEs), the government’s key aim of helping SMEs gain access to capital and new financial instruments.
Also, one of the questions concerns a wage rise, which requires a new deal with employers. He also proposed raising the minimum wage to 400,000 forints (EUR 1,000) and the average wage to 1 million forints “within the foreseeable future”—which he called a “realistic goal.”
Meanwhile, the questionnaire will canvass views on whether young people taking up a job should receive an interest-free loan for whatever purpose they see fit.
The government wants create affordable new places of residence such as dormitories and to help young people buy their first home using state-subsidised loans with very low interest rates. This will also be contained in the survey, he said.
Further, a question about family support will be included, Kocsis said, adding that not only did the Hungarian right and left disagree on this, but the government and the European Commission were also at loggerheads over the issue.
The government wants to double the family tax allowance and other types of family support “may also be discussed”.
Kocsis said the government could consider the party group’s proposal at its meeting this week.
He said the proposed measures were unlikely to be met with “a roar of applause” in Brussels, so it was necessary to get solid backing for them from Hungarian citizens.
National Economy Minister Márton Nagy held a press conference on Monday to present a 16-point deregulation package drafted with the Hungarian Tourism Agency.
Nagy said the package had been put together by the Tourism Consulting Body, a group of industry insiders recently established to advise the government on tourism policy. He added that the goal of the package was to reduce red tape and boost the sector’s competitiveness.
He said the package would regulate short-term rentals in the capital, cap service fees, establish rules for guided tours, and give the SZEP voucher card a digital upgrade. He added that the carbon tax on airlines is also expected to be phased out.
Nagy said the tourism sector was “performing very well,” generating 12 percent of the GDP and over 10 percent of tax revenue, Index noted.
He said short-term, Airbnb-type rentals would be regulated only in the capital, adding that the government agreed with the industry insiders on applying a moratorium on the issue of new homestay permits while raising taxes on the activity.
He said converting rural buildings, such as barns and wineries, into tourism accommodations could boost village tourism.
The package would increase the police presence in Budapest’s “party district”, raising the number of officers on patrol from 48 to 58 and establishing an independent police station there.
It would ease rules on swimming pools at tourism accommodations, eliminating the requirement for a lifeguard for pools with a capacity for fewer than 20 people.
Service fees would be capped at 12pc, and banks would be required to provide a solution offering customers the option to pay their tips separately by bankcard.
Admission fees for zoos could be classified as a tax-free extra-wage benefit.
Nagy noted that there were around 20,000 licensed tour guides in Hungary, but just 3,000-4,000 were active and said licensing criteria and test materials needed to be updated.
A digital version of the SZÉP voucher card will be rolled out in the future, and restaurants will be exempt from having to provide parking in some circumstances. Mandatory data provision for attractions will be expanded to include the parliament building, Saint Stephen’s Basilica, and narrow gauge railways.
The carbon tax on airlines is expected to be phased out from January 1. Budapest Liszt Ferenc International is undergoing developments, and the expressway connecting the airport to the city center is being renovated.
The tourism agency would issue a manual on regulatory compliance in the catering sector, and the excise tax on gas released with thermal water would be scrapped if that gas is not used for commercial purposes.
Nagy said broader adoption of QR payments could benefit tourists arriving from China.
Prime Minister Viktor Orbán announced a new economic programme at a meeting of Fidesz’s parliamentary group focusing on affordable housing, a one million forint income, subsidised loans for workers and capital injections for SMEs, the daily Magyar Nemzet said on Sunday.
Orbán’sspeech, held at a closed meeting at the start of the parliamentary session in Esztergom, in northern Hungary, focused on economic policy and the new economic programme, the paper said. The meeting had been postponed from an earlier date due to the floods, the paper said.
Economic neutrality will bring a turnaround from 2025, and the goverment is working to achieve economic growth exceeding the European Union average, he said.
Orbán said the pandemic and the war in Ukraine had brought changes in the world, and the East was on the rise, while the West was declining. Brussels and the western world had responded by announcing an “economic cold war”, he said. That is harmful for Hungary, and the country is striving to stay out of the cold war, he added.
Orbán said the way to success was economic neutrality. Hungary needed an economic growth beyond the EU average, and that was only possible by maintaining neutrality, he said. That way, the government will be able to raise growth to between 3 and 6 percent, and so will steer Hungary towards stronger growth as soon as 2025, he said.
Photo: MTI/Miniszterelnöki Sajtóiroda/Benko Vivien Cher
The new economic policy will require an agreement between economic players, the Chamber of Commerce, interest groups and employee’s organisations, because “the government does not want to decide above their heads”, he said.
The government is also aiming to achieve a new, multi-year agreement between employers and employees on growth-linked wage hikes, he said. Such an agreement would prepare a reliable path to achieve the 1,000 euro minimum wage and the 1,000,000 forint average wage, he said.
Orbán talks about zero-interest loans
Meanwhile, the government would also like to “double the size of export-ready SMEs”, which would involve capital injections and a new action plan, to be called the Demján Sándor plan, Orbán said.
Regarding a loan programme for workers, Orbán said skilled workforce had a crucial role in the economy, besides degree holders, and so young workers would receive zero-interest loans from 2025, similarly to student loans, he said.
War-related inflation and the energy crisis have raised real estate prices in Hungary and Europe, he said. In order to make housing affordable in Hungary, “because Hungarians believe primarily in owning their apartments and houses”, the government must double the volume of housing construction and push mortgage interests below 5 percent, he said.
Assessing the political situation, Orbán said Wednesday’s European parliamentary debate had shown that “nothing has changed in Brussels”. “You can only be the good guy there if you support the continuation of war uncritically, accept Brussels’s migration policy and open the doors to LGBTQ propaganda.”
Europe had not given up the aim to “force migrants on Hungary and turn it into an uncritical supporter of war”, he said. At the same time, “they know they will never achieve that with the national government, and now they are looking for new vassals besides their old ones, then come rolling dollars and euros, they will lift their intended on their shoulder and promise him impunity,” he said.
“Promises of impunity from Brussels always come with a hefty price tag, and Brusselites like to make Hungarians pay that price,” Orbán said.
Besides the support of migration and war, Brussels also expects Hungary to scrap utility price caps and the 13th month pension, to improve the position of multinational corporations as against Hungarian companies, to raise the PIT and to introduce a property tax, Orbán said.
“I am ready to fight, we shall win,” he concluded.
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The Hungarian government announced an ambitious economic and wage growth plan to reach a HUF 1 million average wage and EUR 1,000 minimum wage by 2028. Márton Nagy, Hungary’s national economy minister, said the realisation needs guest workers because the Hungarian job market is tight.
Anti-migration and anti-guest worker campaign
The Hungarian government initiated a large-scale campaign against illegal migration in 2015. They said that migrants could not take the jobs of the Hungarians. The communication strategy was beneficial. The migration crisis is still present in Hungary and Europe. Orbán’s position (and the related smear campaign) gained at least one supermajority in the 2018 general elections.
Government communication has undergone multiple fine-tuning since then. Illegal migrants are still red flags for the Orbán cabinet. Therefore, they threatenBrussels to take illegal migrants to Brussels by bus if the European Union does not stop slamming and fining Hungary for protecting its Southern borders against the illegal influx.
Bence Rétvári, the secretary of state of the Interior Ministry, held a press conference on the issue in front of some buses. Photo: Facebook/Rétvári Bence
Number of guest workers rising in Hungary
On the other hand, an increasing number of guest workers are occupying vacant positions in more and more sectors. Furthermore, some Chinese investments come to Hungary only if they can bring their workers to ease unemployment at home.
Moreover, the number of Hungarians working abroad for higher wages or jobs creating more added value is growing. As a result, the Orbán cabinet made it easier for Filippino, Vietnamese, Krygyz and other Asian guest workers to come to Hungary and generate GDP here. In June, their number exceeded a psychological barrier. According to the statistics of the Hungarian National Bank, 100,000 guest workers were in Hungary, with 20,000 Ukrainians among them.
The tight Hungarian job market needs guest workers
Márton Nagy, Hungary’s national economy minister, talked about the tight Hungarian labour market in an award ceremony this week. He said Hungary was Europe’s 7th country concerning employment rate with 81%. Their aim is 85%, which would mean 2nd place following Sweden by 2030.
He said the tight Hungarian labour market needed guest workers, who could be here for 2+1 years. Meanwhile, the government would like to spend more on retraining and mobilising the inactive and unemployed.
Ambitious wage rise project
The minister said that the Hungarian government wants the average wage to reach HUF 1 million (EUR 2,500) and the minimum wage to rise to EUR 1,000 by 2028. He said those plans could be realised if economic growth reaches 3-4%. He added the wage convergence programme should be responsible and follow the country’s economic growth.
Can the government programs mobilise the inactive? Photo: Facebook.com/szijjarto.peter.official
Apart from the wage convergence programme and inviting more guest workers to Hungary, the Orbán cabinet would like to provide affordable housing for locals and help the SME sectorscale up.
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Will employment of guest workers in Hungary face further restrictions soon? – read more HERE
Experts worriedthat PM Orbán’s brutal wage rise will bring inflation and a HUF 500/EUR exchange rate
The Hungarian government unexpectedly announced massive road development plans on Wednesday evening. These include projects to connect cities in the Carpathian Basin, but there is a strong emphasis on upgrading secondary roads as well.
Major road development project
As reported by Világgazdaság, an important issue of the Magyar Közlöny („Hungarian Gazette”) was published, outlining government decisions through 74 pages, including the approval of the concepts of public construction investments until 2035.
The bulk of the document focuses on railway improvements, such as the planned purchase of new trains. However, it also includes important road development initiatives, encompassing expressway upgrades and the expansion of 4-lane, two-way public roads.
Photo: MTI
The appendix to the government decision lists the following investment packages, according to Világgazdaság.
Improvements to connect the cities of the Carpathian Basin – a total of 16 projects (four of which are concessionary) will cover nearly 610 km of controlled-access highways and 4-lane, two-way roads. Of these, about 360 km will be newly constructed, with the public-sector elements estimated to cost around HUF 2.9 trillion (roughly EUR 7.2 billion). Additionally, 160 km of secondary and local roads, worth HUF 550 billion (EUR 1.37 billion), will be developed to strengthen economic and social cohesion in border regions.
Investments to promote the development of the network in the west-east direction within the national borders – 12 projects (three of which are concessionary) will cover approximately 850 km of controlled-access highways and 4-lane, two-way roads, with around 540 km of new infrastructure planned. The state-funded elements are expected to cost roughly HUF 3.8 trillion (EUR 9.47 billion).
Road developments planned for Nagyvárosok Magyarországa („Hungary of the Cities”) – 25 associated projects (four of which are concessionary) will include nearly 280 km of controlled-access highways and 4-lane, two-way roads. Around 100 km will be new infrastructure, with the state-funded components estimated to cost approximately HUF 2.3 trillion (EUR 5.73 billion).
To ensure access to the highway and primary main road network within 30 minutes for all residents by 2035, the network of secondary main roads and side roads is planned to be extended and its service quality improved. The improvements would cover 1,750 km of the network, and they would also include 30 interchanges, 14 bridges, 39 bypasses, and 8 engineering stations, for a gross value of HUF 5.7 trillion (EUR 14.2 billion). Also by 2035, 140 km of road network elements are planned to be upgraded to improve road access to industrial and technological centres, for a gross value of roughly HUF 440 billion (EUR 1 billion).
Source: MTI
Government decision on road renovations
Another significant aspect of the aforementioned concepts is renovation. Since the deterioration of main roads is faster than that of side roads due to the high traffic load, a twenty-year lifetime can generally be achieved assuming standard maintenance procedures. Based on a twenty-year renovation cycle, an average of 5%, 350 km of the 7,018-km network needs to be renewed every year. To bring the roads up to modern standards, 3,726 km will need to be upgraded over the next decade, averaging 375 km per year—far exceeding the standard renovation target.
Photo: FB/Magyar Közút
Side roads are typically subject to lower traffic loads, so with proper maintenance, the pavement can be kept in an acceptable condition for approximately 30 years. This means that, under a 30-year renovation cycle, 3.3% of the 23,116 km network, or around 770 km, needs to be renewed annually. However, to bring these roads up to current standards, 11,193 km of the network will need to be upgraded over 10 years, requiring an average of 1,120 km per year—considerably higher than the standard target of 770 km annually.
Municipal roads present a separate issue. Investments into the local road developments managed by municipalities would be supported in the form of tenders that local authorities would be able to apply to, up to a determined limit. These calls for proposals would be launched and managed by the Minister of Public Administration and Regional Development (Tibor Navracsics), as the government member responsible for local governments.
Prime Minister Viktor Orbán said there was “little chance” of addressing the decline in competitiveness at the European Union level and the focus should be on the national level in a weekly interview with public radio on Friday. He believes his plan would give a “big boost” to the Hungarian economy.
“Our positions are very far apart, which is why Hungary has to focus on itself, not Europe,” Orbán said on Kossuth Rádió. He added that the response to Hungary’s presentation of its programme for the presidency of the Council of the European Union in the European Parliament during the week had been a “diversion” and the government had weighed matters related to the Hungarian economy for weeks.
The government has drafted a big action plan that will give new impetus to the Hungarian economy, he said. The economic cabinet discussed the plan, which includes measures supporting affordable housing, higher wages and advancing SMES, on Thursday, he added.
He said the plan would give a “big boost” to the Hungarian economy, adding that the housing measures would produce a “housing boom”. He said those measures included dormitory construction and steps to make affordable housing available to young Hungarians, including rental constructions. The government will support home construction in Hungary’s smallest settlements in the framework of the Hungarian Village programme, while eliminating bureaucratic obstacles to using savings for home purchases, he added.
Photo: MTI/Miniszterelnöki Sajtóiroda/Benko Vivien Cher
HUF 1m/month wage realistic
He said talks between employers and unions on the minimum wage were “progressing well” and an agreement on the scale of the minimum wage increase was within reach. He said that aiming to boost the average wage in Hungary to HUF 1m a month was “not unrealistic”.
He affirmed government plans to roll out credit for young blue collar workers similar to student loans.
He said assistance for SMES, in the framework of a programme named after the late business magnate Sandor Demjan, would include access to equity financing and preferential credit and aimed to make SMEs more stable and bigger.
Orbánsaid financing for the measures would have to come from Hungary’s own economic growth, while fiscal deficit and state debt levels continued to decline.
Unilever expansion in 2023. Photo: FB/Szijjártó
He said September consumption data was “encouraging”, along with real wage growth of close to 10pc, “unmatched in Europe”. He said the debate over sluggish consumption, even amid high real wage growth, was “not healthy”, as it was up to Hungarians to decide what they wanted to do with their money.
He said the real problem was the slowdown in the European automotive industry, which impacted Hungary as an “automotive industry giant” and home to plants of all three premium German car makers.
We will accept from the West and from the East only that which benefits Hungarians
“It doesn’t matter what Europe says, we will stick to our policy of economic neutrality. We will accept from the West and from the East only that which benefits Hungarians, while we will reject that which is against our interests,” he added.
Orbán said that policy could boost GDP growth to 3-6pc, with tangible results already in 2025. He put GDP growth in the last two quarters of 2024 “somewhere between 1 and 2 percent”, but said there would be a “huge pickup” starting in the first half of 2025. Hungary’s long-term economic outlook is “bright”, he added.
Orbán said adapting to global changes had made a new Hungarian economic policy necessary, adding that a new pact on that policy had to be made with Hungarians.
He said the economy minister had presented the “trends, numbers and general concept” for the plan on Thursday. A government resolution will assign tasks related to the policy, and concrete measures could be unveiled in 2-3 weeks, he added.
The government needs to consult with interest groups, economic players and “ultimately with the people” on those measures, he said.
Minister presses for improved EU competitiveness at SME level
The European Union’s competitiveness needs to be strengthened at the SME level, too, Justice Minister Bence Tuzson said ahead of a meeting of the Justice and Home Affairs Council in Luxembourg on Friday. Tuzson noted that strengthening competitiveness was a priority of Hungary’s presidency of the Council of the EU. He said ministers at the meeting would discuss ways to streamline EU regulations to make them more transparent for SMEs. Priorities of the Hungarian presidency also include countering racism and anti-Semitism, he said, adding that the “firmest steps possible” had to be taken.
Also on the agenda of the meeting are EU drugs policy and the fight against organised crime, he said. Following the meeting, at a joint press conference with Didier Reynders, the European commissioner for justice, Tuzson said the ministers had weighed ways the EU’s legal system could be used to strengthen member states’ competitiveness. “EU competitiveness is not just about economic matters, but legal issues, too,” he added.
He said tools needed to be found that could strengthen the legal position of vulnerable SMEs, the “backbone” of economic life and job creation in the EU, and ease their access to legal recourse. He pointed to the importance of member states’ cooperation in the fight against drugs and organised crime. He called anti-Semitism “extremely dangerous” and noted that Hungary had a “zero tolerance” policy for anti-Semitism. The ministers discussed ways to take common steps against anti-Semitism and racism by exchanging information and adopting best practices, he added.
The war in Ukraine was also discussed, he said. Reynders said ways to hold accountable people who had committed atrocities were being considered, including the establishment of an international court.
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Experts worriedthat PM Orbán’s brutal wage rise will bring inflation and a HUF 500/EUR exchange rate
The government targets a rapid wage convergence, paired with GDP growth of 3-6pc, from next year, National Economy Minister Márton Nagy said at an awards presentation on Friday.
Nagy said this year’s GDP growth had failed to meet expectations mainly because of the downturn of the German economy — which hit the automotive industry hard — and domestic consumption developments. He said that third-quarter GDP growth was “minimal” and put fourth-quarter growth at 1-2pc. He augured a sharp rise in GDP growth from the first quarter of 2025, putting Hungary in the “3-6pc category”.
The national economy minister, Márton Nagy. Photo: MTI/Soós Lajos
The government targets a minimum wage of EUR 1,000/month and an average gross wage of HUF 1m/month by 2028, he said.
He said the government supported an agreement between employers and unions that would raise the minimum wage to 50pc of the average wage by 2027. That would require the minimum wage to rise from HUF 266,800/month at present to HUF 374,800 by January 1, 2027, and to HUF 419,815 a year later, he added.
At the same time, the average wage could rise from HUF 651,147/month at present to HUF 878,549 by 2027 and to over HUF 970,000 by 2028, he said.
Nagy said wage convergence could be supported by the launch of a credit scheme for young blue-collar workers, doubled family tax preferences and low inflation. He added that the government aimed to boost employment by tapping labour market reserves, raising the employment rate among 20- to 64-year-olds from 81.4pc to 85pc by 2030.
EUR/HUF exchange rate at the time of editing of the article: 400.84
Hungary’s annualised consumer price index reached 3.0pc in September, falling from 3.4pc in the previous month, according to data released by the Central Statistics Office (KSH) on Thursday.
Inflation in Hungary decreases
The KSH data show food prices rose 3.7pc in September. The price of flour jumped 32.9pc, milk prices rose 13.8pc and the price of eating out increased 7.6pc, but noodle prices fell 5.8pc, egg prices dropped 3.5pc and the price of poultry edged 2.4pc lower.
Household energy prices fell 5.0pc. Gas prices were 9.4pc lower and electricity prices declined 1.3pc.
Consumer durable prices edged down 0.2pc.
Motor fuel prices fell 9.5pc.
Prices of spirits and tobacco products increased 3.9pc and clothing prices rose 3.3pc. Service prices increased 8.4pc.
Core inflation, which excludes volatile fuel and food prices, was 4.8pc.
The CPI calculated with a basket of goods and services used by pensioners was 3.2pc.
In a month-on-month comparison, consumer prices edged down 0.1pc as motor fuel prices dropped 3.7pc.
Minister’s comments
Commenting on the fresh data, National Economy Minister Márton Nagy pointed to the success of government measures to bring high inflation, a consequence of the war and sanctions, down to a “persistently low” level.
The government is keeping some of those measures in place, such as an online price comparison platform featuring products stocked at the biggest supermarket chains in the country, he added.
Persistently low inflation translates as predictability and strengthens consumer confidence, boosting consumption and supporting economic growth, he said.
Home prices rise 6.7pc in September – ingatlan.com
Home prices in Hungary rose 6.7pc year-on-year in September, listings site ingatlan.com said on Thursday.
Home prices in the capital climbed 9.1pc. Price growth continued to accelerate, ingatlan.com said.
Prices of homes in Budapest averaged HUF 1,070,000/sqm (EUR 2,673) at the start of October, but were as high as HUF 1,730,000/sqm (EUR 4,322) in the central District V.
In Debrecen, Hungary’s second-biggest city, home prices averaged HUF 839,000/sqm (EUR 2,096). Homes were the cheapest in Salgotarjan (NE Hungary) at HUF 282,000/sqm (EUR 705).
Next year, ingatlan.com augurs a 10-15pc increase in home prices.
Hungary advocates neutrality in trade policy and is opposed to the creation of economic blocs, National Economy Minister Márton Nagy said at an event marking the European Day of Commerce on Wednesday.
Nagy said reducing division was the way forward and criticised a European Union decision to levy protective tariffs on Chinese EVs. He added that an “economic cold war” would harm the Hungarian economy and pressed for cooperation between capital from the East and the West.
Addressing the retail sector, Nagy said domestic ownership and inventories of local products should be raised to levels in countries in Western Europe.
He brushed off criticism by some market players of government measures affecting the sector and said price caps and mandatory discounts at supermarkets had been necessary to bring down inflation. He added that it was the job of retail chains to more efficiently serve consumer needs.
He said the government was closely watching developments affecting inflation.
Retail sales are on the rise, especially sales of food, and the favourable trends are expected to continue in the coming months, he said. He added that changing consumer habits could be a bigger problem for retailers than consumer confidence, noting a younger generation of consumers who grew up with the internet.
Photo: Aldi/FB
He said the National Commerce and Consumer Protection Authority (NKFH) would start operating in January, taking a roll that would support commerce policy as well as covering consumer protection tasks. The authority will also take over some activities, such as food laboratory tests, from food safety authority Nebih, he added.
László Krisán, the head of business association VOSZ, said Hungary’s commerce sector accounted for close to 12pc of GDP, over the EU average. He augured positive developments as consumer caution eased and said brick-and-mortar businesses were around to stay.
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Good news from the Hungarian economy: National Bank prepared to protect the Forint, inflation likely to fall – read more HERE
When the Hungarian forint began losing value in 2022, the Hungarian National Bank (MNB) intervened by significantly raising the base interest rate to protect the national currency. Since then, the Bank has been gradually lowering the base rate to help revive the economy’s struggling engine. However, global developments may once again necessitate action to defend the forint, and it appears the Bank is ready to do so.
Hungarian National Bank poised to defend the Forint
According to portfolio.hu, the Hungarian National Bank may adopt a more cautious approach to its next base rate decision, expected in October. This caution is partly due to global uncertainties, such as the upcoming US presidential election and ongoing geopolitical conflicts.
Barnabás Virág, a Deputy Governor of the Hungarian National Bank, elaborated on this during a presentation for investors. He explained that the Bank’s capacity for manoeuvre with regard to lowering the base rate in October is becoming more limited. Key factors influencing the Bank’s decision include inflation in Hungary, regional economic performance, and the global risk environment.
György Matolcsy, the governor of the Hungarian National Bank. Photo: FB/MNB
The situation in the Middle East has escalated, China has unveiled measures to stimulate its economy, and the United States has reported stronger-than-expected economic data. These factors have increased the risk of higher inflation, while geopolitical uncertainties have already driven the forint above the 400/EUR level. As a result, the Bank’s more cautious stance is understandable.
Hungarian government aims for economic growth
As Hungary moves into the campaign period for the 2026 general election, government officials, including Prime Minister Viktor Orbán, have been emphasising the need for economic growth, rising wages, and increased investment. This would require an injection of capital into the economy. However, despite foreign investment, domestic consumption has not risen as the government had anticipated.
Source: depositphotos.com
Due to the high base interest rate, many Hungarians have opted to keep their savings in banks or even abroad. While the government would like to reduce interest rates to stimulate consumption and boost growth, lowering rates too far could make the forint even more volatile. With numerous global and regional uncertainties at play, the exchange rate could easily rise, leading to soaring inflation—a vicious cycle that would be difficult to break.
Inflation may fall this autumn and winter
Analysts consulted by portfolio.hu believe that inflation continued to decline in September, with the median inflation rate likely to be around 3%. Fresh data on the subject is expected to be released tomorrow. If these predictions are correct, it would mark the first time in 3.5 years that inflation in Hungary has fallen below 3%. The last time inflation was below this level was in January 2021, indicating that Hungary’s inflationary pressures began to mount well before the war in Ukraine.
In December, analysts expect the Hungarian Central Statistical Office (KSH) to report a year-on-year inflation rate of 4.5%, lower than the previously forecast 5%. However, portfolio.hu noted that inflation in December 2025 may end up higher than currently expected. For 2024, yearly inflation is projected to be around 3.8%.
UPDATE: Policy makers acknowledged factors allowing ‘careful’ rate reduction at September meeting
National Bank of Hungary (NBH) rate-setters agreed that continuing disinflation, a looser external monetary policy environment, the country’s improved risk perception, and a gradual improvement in confidence among economic players allowed a “careful” reduction in the base rate at a policy meeting in September, but still argued “in general” for maintaining a restrictive policy stance, the minutes from the meeting released on Wednesday show. The NBH’s Monetary Council voted unanimously at the meeting on September 24 to cut the base rate by 25bp to 6.50pc, after weighing an option to keep the base rate on hold, too.
“The Council considered these options primarily based on the outlook for inflation, economic agents’ precaution and changes in the external monetary policy and risk environment,” reaching a consensus that disinflation was expected to continue over the monetary policy horizon, while pointing to a “somewhat looser” external monetary policy environment, a “slight” improvement in the country’s risk perception and the gradual recovery of confidence among economic agents, according to the minutes. “In the Council’s assessment, all these factors allowed a careful reduction in interest rates. However, members in general argued for maintaining a restrictive monetary policy stance and preserving financial market stability,” the minutes show.
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Revolut, one of the world’s fastest-growing fintech companies, is taking concrete steps towards establishing a branch in Hungary. With over 1.5 million users already in the country, the company is now actively seeking professionals to build its local workforce, signalling a strong commitment to expanding its presence in the Hungarian market.
For some time, Revolut has been delivering its services to Hungarian users from abroad. However, that is about to change as the company is now in the process of setting up a local office. The news was initially hinted at by Antoine Le Nel, Revolut’s Growth and Marketing Director, back in August 2023, and the company’s plans have now progressed further. According to a report by Revb.hu, the fintech company is currently recruiting staff for key roles in its future Hungarian branch. Positions like Legal Counsel and Regulatory Compliance Manager are being advertised on LinkedIn, and the company is on the lookout for skilled experts with significant experience in these fields.
Balázs Györffy, Revolut’s Manager of Expansion, also confirmed these developments on social media, stating that the company is working at full speed to establish its branch in Hungary. This move is part of the company’s broader global expansion, which includes efforts to enter other key markets, such as India.
Why a branch, not a subsidiary?
Revolut has clarified that they are opening a branch in Hungary, not a subsidiary. This strategic choice means that the company will not apply for a Hungarian banking license. Instead, the services provided to Hungarian customers will continue to operate under Revolut’s Lithuanian banking license. As a result, customer deposits will still be insured through Lithuania’s deposit protection scheme.
That said, opening a local branch will bring specific advantages for Hungarian users. For instance, Revolut plans to offer Hungarian IBAN numbers, simplifying salary transfers and local transactions. This could also enhance access to immediate domestic transfers, something currently limited by the international nature of Revolut’s operations. Additionally, the company will be providing Hungarian-speaking customer service, replacing the existing international support team.
In the past, the Hungarian National Bank had encouraged Revolut to establish a subsidiary, which would have allowed the company to join Hungary’s National Deposit Insurance Fund. However, the fintech company chose not to pursue this option, citing it as a strategic decision. Tamás Léder, Revolut’s Hungarian country manager, explained that while the company decided against becoming a subsidiary, they are fully committed to growing their operations in the country.
The company has been handling the Hungarian government’s evolving tax and fee structure, including the recent introduction of transaction taxes on currency exchanges. Since October 2024, conversions have been subject to a higher levy. Despite these regulatory changes, Revolut has continued to absorb these costs rather than passing them onto customers, though this may not be sustainable in the long term.
What does this mean for customers?
The establishment of a local branch is a significant step forward for Revolut’s users in Hungary. In addition to Hungarian IBAN numbers, customers will benefit from faster and more efficient transactions, especially when dealing with local banks. This will particularly help the many Hungarians who already use Revolut to receive their salaries. The current process, which involves transferring funds to a Lithuanian account, can result in delays and additional fees. Hungarian IBAN numbers will solve these issues, making Revolut a more viable option as a primary bank account for many users.
Furthermore, the new branch will provide local customer support, improving the user experience and offering more direct solutions for handling complaints and queries. This level of localised service is expected to increase the company’s popularity and user base in Hungary, which it aims to grow to 2 million by 2025.
The Hungarian-Serbian Joint Economic Commission convened in Budapest on Tuesday.
Hungarian-Serbian Joint Economic Commission
After the meeting, at a press conference with Serbian Minister of Internal and Foreign Trade, Tomislav Momirovic, Minister of Foreign Affairs and Trade Péter Szijjártó, said cooperation between the two countries had benefitted both in terms of ensuring energy supply.
He noted that gas deliveries to Hungary via Serbia had reached 5.6bn cubic meters this year, while Hungary was storing 160m cubic meters of gas for Serbia.
He welcomed establishing a joint gas trading company that had become a big regional player and said a Hungarian-Serbian-Slovenian electricity bourse would launch by year-end.
Szijjártó said construction of a 310km crude pipeline from Serbia’s border to Hungary’s Danube Refinery would cost around half a billion euros. He added that construction could start next year and finish in three to three-and-a-half years.
He said a decision had been made on the site for an interconnector between the two countries’ electricity grids, which will be completed by 2028.
He said bilateral trade between Hungary and Serbia stands at around EUR 5bn, adding that headcount at border crossings had been raised to ease trade of goods.
Szijjártó touched on upgrading the Budapest-Belgrade rail line. Szijjártó said 150km of track on the southern stretch in Hungary had been laid, and the entire section would be completed by 2026.
He said state-owned energy group MVM would contribute to constructing a power plant to supply Serbia’s national stadium, which will be built in Belgrade.
Fielding questions at the press conference, Szijjártó said Hungary was unaffected by the expected end to transit deliveries of Russian gas via Ukraine. He explained that Hungary now gets most of its gas through the TurkStream pipeline.
Addressing a Hungarian-Serbian business forum later on Tuesday, Szijjártó said both countries advocated connectivity instead of economic blocs. “Serbians are grounded in common sense, they are not restricted by ideological commitments,” he added.
He said that representatives from 118 Hungarian and 43 Serbian companies participated in the forum.
Hungary, Serbia sign agreement modifying double taxation avoidance treaty
Hungary and Serbia signed an agreement modifying their double taxation avoidance treaty in Budapest on Tuesday, the Finance Ministry said.
The agreement was signed by Norbert Izer, the state secretary for tax affairs, and József Kerekes, the state secretary at Serbia’s Finance Ministry.
Izer said the agreement, signed after a Hungarian-Serbian Joint Economic Commission meeting, was “another step” toward closer economic ties.
Decisions made by European Union finance ministers at Tuesday’s Ecofin meeting should contribute to building a more resilient Europe, Finance Minister Mihály Varga said in Luxembourg.
Varga told journalists ahead of the meeting that the council’s agenda includes implementing the Recovery and Resilience Facility (RRF), providing financial support for Ukraine, and fighting climate change.
Minister Varga said that regarding the RRF, Hungary has only received 8 percent of the funds it was entitled to so far.
As regards the economic impact of the war in Ukraine, the minister said the meeting will cover a 50 billion euro aid package for Ukraine.
He said the council will also reflect on the lessons of the 2024 European Semester package “to ensure a more efficient process in the future.”
Minister Varga said finance ministers are also set to discuss conclusions on climate finance in preparation for the upcoming COP29 summit and the annual meeting of the World Bank Group and the International Monetary Fund in Washington.
At a press conference after the meeting, Varga said the biggest challenge before Europe was the restoration of the EU’s competitiveness. He said member states had made progress on reaching a new European competitiveness agreement that could restart the European economy.
Varga said the EU had fallen behind other continents and the bloc’s competitiveness was at stake. He said a trade war was not the right was to improve competitiveness, adding that Hungary favoured connectivity instead.
He said that as a result of a policy leading to blocs forming in the world economy, the EU’s competitiveness has fallen to one-fifth of that of the US and a tenth of China’s.
Hungarian minister said European financial markets must be boosted to fully improve competitiveness. That will hinge on making European financial markets more effective. Resources must be channeled into economic development and investment.
Varga said that
Hungary, the European Council’s president, is working to coordinate that development.
He said Hungary had staked its bets on economic neutrality and remained open to Western and Eastern markets. “Accordingly, we are opposed to the tariffs the EU is slapping on the imports of Chinese e-cars.”
Regarding the aid for Ukraine, Varga said Hungary insisted on close supervision of those resources.
Meanwhile, Varga called on the EC to speed up the disbursement of the post-Covid Reconstruction and Resilience Facility’s resources. Four years after the pandemic, Hungary has only received 8 percent of the funds, he added.
“That shows that the EU’s lack of competitiveness is rooted in bureaucracy and sluggish Brussels administration,” he said.
National Economy Minister Marton Nagy addressed an event organised by the World Economic Forum (WEF), entitled High-Level Dialogue on Europe in the Age of Intelligent Economics, in Geneva late Monday, his ministry said.
In his speech, Nagy said a new economic order was taking shape in the world, and Europe needed to preserve its independence. To achieve that, he said Europe needed to boost its competitiveness, step up its innovative performance, and accelerate the green transition and the application of artificial intelligence.
While Asian economies, especially China and the United States, quickly adapt to new challenges and support their economies with all means, he said, noting Americans’ Inflation Reduction Act, the European Union has fallen behind in new branches of industry and has been slow to react to latest trends. He added that joint action was necessary as the EU’s competitiveness deteriorated unprecedentedly.
Not only has the EU failed to take steps to address the matter, but some of its measures have contributed to the formation of blocs and could pave the way for an “economic cold war,” he said, pointing to the EU decision to levy punitive tariffs on EVs manufactured in China. He added that five member states—Germany, Hungary, Slovakia, Slovenia, and Malta—had voted against the measure, while just ten had supported it.
He warned that punitive tariffs would be a “calamity” for the European automotive industry, especially vehicle manufacturing in Germany, and could result in retaliatory measures. He urged caution on the matter and said negotiations needed to continue to reach a mutually beneficial agreement.
Nagy said Hungary seeks cooperation based on mutual respect with all sides and makes its own decisions about economic partners. That principle is embodied in the policy of economic neutrality, which establishes the conditions for accelerated economic growth.
He said policy extended to neutrality in financing, investments, markets, energy, and technology. As a small, open economy, Hungary is committed to connectivity and wants to strengthen further its role as a “meeting point” for capital and technology from the East and the West, he added.
He said that if EU member states want to boost their competitiveness, they need to be prepared to temporarily run up higher budget deficits. Those bigger fiscal gaps wouldn’t result in imbalances, as the goal was to boost economic growth and strengthen competitiveness.
As we wrote yesterday, Hungary’s retail sales growth is modest, and the trade surplus is decreasing, but the ministry still celebrates; details are HERE.
European Union credit guarantees in the framework of the InvestEU programme will pave the way for outlays of close to EUR 1.49bn for SMEs, Máté Loga, the state secretary for economic strategy at the National Economy Ministry, said at a press conference on Monday.
Loga said the InvestEU guarantees would reduce financing risks for local SMEs and raise the scale of SME lending stock over 20pc of GDP by 2030.
István Attila Szabó, the head of Garantiqa, said the guarantor could use the InvestEU guarantees for surety of EUR 1bn. The guarantee products will be available from CIB Bank, MBH Bank and Oberbank initially, but at more lenders later on, he added.
The guarantees will back credit for investments in the digital and green transitions, regional and rural development, the farm and food industry, supply chain developments, efficiency improvements and R+D, he said.
Garantiqa’s surety stock was close to HUF 690bn at the end of August and could exceed HUF 1,000bn (EUR 2,49bn) by year-end, he added.
