economic crisis in Hungary

Food price inflation surprisingly high, Orbán cabinet extends price monitoring system

Shopping abroad Penny Hungary Easter retail food price sales

The government is weighing the addition of more products to an online platform that monitors the prices of a broad range of food at Hungary’s biggest supermarket chains, the National Economy Ministry said on Wednesday.

With the addition of fish, coffee, tea, rice, cream, beef, sausage, sweets and cocoa, the number of products on the platform could rise to 100. Launched on July 1, 2023 as part of government measures to spur competition and bring down food price inflation, the platform features daily price comparisons at Aldi, Auchan, Lidl, Penny, Spar and Tesco.

Shopping abroad Penny Hungary Easter retail food price sales
Photo: FB/PennyMarketMagyarorszag

According to 24.hu, based on the latest data, the average food price inflation in Hungary is above 5.4%.

Economic stimulus off to ‘flying start’, says Orbán

The government’s economic stimulus measures are “off to a flying start”, Prime Minister Viktor Orbán said in a video message on social media on Wednesday. “We’re not just making promises, but working and making progress,” Orbán said.

He noted the launch of the Demján Sándor Programme, a scheme to scale up local SMEs, as well as of subsidised credit for young, blue collar workers. He also pointed to some HUF 1,700bn in yields on retail government securities to be paid to over 800,000 households in the course of 2025, adding that they would get HUF 954bn of that amount in the first quarter.

Rather than “fattening up” foreign investors, those yields are going to Hungarian households which is “good for families, good for the Hungarian economy and good for Hungary”, he said. “So starts a fantastic year,” he added.

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Many guest workers leave Hungary to work in other countries, prompting PM Orbán to introduce stricter measures
Another unexpected turn in the Grand Budapest project: here’s the National Asset Management’s reaction – UPDATED

Many guest workers leave Hungary to work in other countries, prompting PM Orbán to introduce stricter measures

guest worker workers guest workers in Hungary Orbán cabinet

Hungary is among the European nations welcoming the highest number of guest workers each year. However, the majority of these individuals do not intend to remain in Hungary. Instead, they view their arrival in Hungary as a stepping stone towards obtaining higher salaries in other Schengen Zone countries. For this reason, Prime Minister Orbán and his cabinet have introduced stricter rules and reduced the number of guest workers permitted to enter Hungary, excluding several nations from the programme.

Hungary serves merely as the first milestone

“There are many illegal migrants. Hungary is like Mexico, from where migrants travel to the USA. They come here with visas and then leave to work in Poland or other European countries,” a guest worker in Hungary, Aszlan Szamugyinov, told Szabad Európa in December. Gábor Hideg, CEO of Villeroy & Boch, told Telex in 2023 that they could not even meet their Vietnamese workers because these workers travelled to Germany immediately after landing at Budapest Airport.

Government restrictions

According to G7, the increasing number of foreign workers leaving Hungary to work elsewhere is the primary reason behind the government’s newly introduced restrictions. As previously reported, the Orbán cabinet reduced the permitted number of guest workers to 35,000, down from 65,000, despite the number of vacant positions remaining unchanged. Additionally, the government excluded countries such as Vietnam, India, China, South Korea, Mongolia, and Kyrgyzstan from the programme. From 2025, only guest workers from countries that have signed repatriation agreements with Hungary will be eligible for employment.

guest workers from india hajdúnánás
Guest workers from India. They will no longer be eligible for the program. PrtScr/ATVnews

.The first restriction introduced in March 2024 empowered authorities to fine employers whose guest workers failed to leave Hungary within eight days of their permit’s expiration. These fines can amount to millions of forints.

A study by the Periféria Központ (Periféria Policy and Research Centre) revealed that the number of guest workers leaving Hungary to seek higher wages elsewhere has grown. Although their work permits are valid only in Hungary, their residence permits allow them to move freely within the Schengen Zone.

Many guest workers leave due to low salaries and lack of overtime work

Some recruitment agencies specialising in guest worker headhunting offer much better opportunities than those available in Hungary. In some cases, guest workers hide from authorities within their ethnic communities. According to the study, Ukrainian, Vietnamese, and Filipino guest workers are particularly prone to this. In 2023, for example, 2,000 Filipino guest workers chose to leave Hungary. Among Vietnamese workers, the departure rate is astonishingly high, at approximately 80%. This trend led some Hungarian HR companies to cease recruitment efforts in Vietnam well before the government excluded the country from the programme.

guest workers foreign
Source: depositphotos.com

The study attributes these departures to low salaries, worsening working conditions, and poor workplace communication. Additionally, due to the declining strength of Hungarian industry, guest workers in Hungary face fewer opportunities for overtime work.

Repatriation to become easier

Company executives have expressed hope for improved communication between the authorities of different countries following the new guest worker regulations. As a result, guest workers who fail to comply with Hungarian regulations may face consequences in their home countries. There have been multiple instances of early contract terminations, as Hungary’s struggling economy has led to layoffs. Many dismissed guest workers have opted to remain within the Schengen Zone rather than returning home.

The study indicates that the number of guest worker permits issued has increased in Hungary, Croatia, Lithuania, Romania, and Bulgaria in recent years. Hungary competes with Italy, Czechia, and Poland to retain its foreign workforce. Notably, Hungary is the third most popular destination for Filipino workers after Italy and Malta. For Vietnamese workers, Hungary ranks as the second most popular destination.

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  • This is why guest workers are essential for Hungary’s economy
Guest worker situation after regulations change in Hungary: What companies can expect

Featured image: deposithotos.com

This is why guest workers are essential for Hungary’s economy

guest workers

The business association VOSZ has underscored the necessity of guest workers to support Hungary’s current phase of economic development, cautioning against administrative measures that could hinder such employment opportunities. 

In a statement issued on Tuesday, VOSZ highlighted a critical shortage of blue-collar workers across the nation, emphasising that foreign labour is indispensable for completing investments that, in turn, generate additional local employment. Without the ability to secure essential hires, companies may be forced to scale back operations or relocate to business environments deemed more favourable.

Practical experience reveals widespread misconceptions regarding guest workers. Chief among these is the belief that their lower wages suppress Hungarian earnings or that higher domestic wages would eliminate the need for foreign labour. Yet, in many cases, employers hire guest workers despite the fact that the total cost of employing them can be substantially higher—by as much as 30 to 50 per cent—than for Hungarian nationals.

The reality is that the employment of migrant workers does not occur instantaneously. Integration entails considerable costs, including housing, training, travel, and the recurring expenses of replacing workers after their typical 2-3 years of availability. These factors illustrate that the value proposition of guest workers is far more nuanced than critics suggest.

As we reported earlier, Hungary lowers guest worker cap, 10 countries on the banned list

Addressing misconceptions about guest workers’ wages

The integration of foreign workers raises pertinent questions: how long does it take for a guest worker to start employment upon arrival in Hungary? And what are the associated costs to employers in readying these workers for their roles?

According to VOSZ, the principle of equivalence enshrined in the Labour Code guarantees that guest workers receive the standard wage for their role, irrespective of nationality. They can only earn more through overtime or additional responsibilities. Yet, the costs borne by employers in preparing guest workers for employment—covering accommodation, training, and logistical needs—far exceed those for Hungarian employees.

Guest workers tend to focus solely on their work during their temporary stay in Hungary, as their families often remain abroad. With a limited window of 2-3 years to provide for their loved ones, these workers are driven by necessity rather than choice. In contrast, Hungarian employees, living in their home country, balance their work responsibilities with family life, leisure, and social connections. This distinction significantly elevates the “value of free time” for Hungarian workers, shaping their preferences and readiness for certain roles.

The reality of differing priorities

It is not a matter of judgment between “good” and “bad” workers; rather, it reflects differing living conditions and priorities. Hungary’s rising standard of living has created a situation in which certain roles are no longer appealing or feasible for local workers. These gaps, therefore, must be filled temporarily by foreign labour—a pattern long observed in Western Europe and the United States, where less developed nations have historically provided workers for various sectors, not exclusively blue-collar.

As economic conditions evolve and technological advancements accelerate, the demand for guest workers may decline. However, in the interim, it is imperative to avoid the imposition of unnecessary bureaucratic hurdles that could stifle economic progress. The repercussions of such policies would be felt across the Hungarian economy and society at large.

After the worker cap: guest workers can still come to Hungary

Related article

Guest worker situation after regulations change in Hungary: What companies can expect

Hungarian minister Nagy: EU must be saved before it dies

márton nagy minister

Hungary believes in boosting competence, and sees this as the European Union’s opportunity to rise, but the resources necessary for a turnaround are lacking at the level of the EU, National Economy Minister Márton Nagy said at a conference evaluating Hungary’s EU presidency in Budapest on Monday.

Nagy said the EU “must be saved before it dies,” as its economy cannot compete with the United States and China under the current circumstance.

It is estimated that EUR 700bn-800bn are missing for investments for the digital and green transition at the EU level, and there will not be enough money as long as financing is limited by fiscal discipline, he said. There is no need for “fiscal alcoholism,” but the EU should reform its financing rules as the initial costs of the digital and green transition are high, and in order to achieve structural transformation, “the money taps must be opened”, channeling new funding to the right places. Europe must therefore decide whether it considers competitiveness or deficit targets to be more important, he said.

Instead of investments, the EU was financing the war in Ukraine while the United States and China were continuously investing into industries with high added value, Nagy said. He said the EU was already lagging behind in artificial intelligence, it may have a future in space industry, but the automotive industry could be the real breakthrough point. However, there is not a single community directive addressing e-mobility and the electric vehicle market has also stalled in Europe, Nagy said.

The minister said the next six-to-eight weeks could bring important changes as the change of the US president and the German election could also be of decisive importance from Hungary’s perspective.

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Hungary falls behind as Romanian and Bulgarian wages surge

Demján Sándor Programme to boost investments due to start on January 23

More than 6,500 entrepreneurs have registered for the Demján Sándor Programme for scaling up SMEs in the past five weeks, which shows that enterprises do have plans to launch investments and purchase new assets and the government wants to support them, state secretary for SME development and technology Richárd Szabados said on Facebook on Monday.

The funding documents are expected to be issued in the spring, Szabados said.

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Grim data: Hungary among EU’s lowest in household material welfare

Grim data: Hungary among EU’s lowest in household material welfare

Budapest Hungary people citizen street competitiveness eu

Recent data from Eurostat highlights stark disparities in household material welfare across Europe, with Hungary ranking at the bottom alongside Bulgaria. The study uses Actual Individual Consumption (AIC) per capita, expressed in Purchasing Power Standards (PPS), to measure material well-being. This indicator accounts for all goods and services consumed by households, whether paid for directly or provided by governments and nonprofits.

Hungary’s position in the EU

According to Euronews’ reports, in 2023, Hungary’s AIC per capita was just 70% of the EU average, a figure it shares with Bulgaria, marking the lowest levels among member states. In contrast, Luxembourg led the EU with an AIC per capita of 136%, or 36% above the EU average. Neighbouring countries like Slovakia and Croatia also recorded below-average material welfare, but Hungary’s standing underscores the persistent economic challenges faced by Central and Eastern European nations.

Regional trends and comparisons

While nine EU countries—including Germany, Austria, and the Netherlands—exceeded the EU average for household material welfare, Hungary continues to trail significantly. Notably, countries like Poland (83%), Czechia (81%), and Greece (80%) outperformed Hungary in this measure. Among non-EU countries, Türkiye achieved an AIC per capita of 84% of the EU average, surpassing Hungary and eight other member states. This highlights the growing economic divergence between EU and candidate countries, with Türkiye standing as an exception due to its relatively high material welfare.

Changes over time

Over the last five years, Hungary’s AIC per capita saw slight improvements, climbing from 62% in 2020 to 70% in 2023. This modest growth aligns with trends in other lower-ranking EU nations, such as Bulgaria, but contrasts with declines in wealthier member states like Denmark and Finland.

Insights on material welfare

“A household’s material well-being can be expressed in terms of its access to goods and services”, Eurostat writes. Hungary’s position at the bottom of the EU rankings highlights larger regional disparities in living standards. While Western and Nordic countries consistently report higher material welfare, Central and Eastern European nations, including Hungary, struggle to close the gap. These differences emphasise the challenges in achieving economic parity across the bloc. As Hungary continues to negotiate economic pressures, the AIC per capita data serves as a stark reminder of the ongoing need for targeted policies to improve household material welfare.

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Featured image: depositphotos.com

New economic policy action plan unleashes €10 billion through 21 measures in Hungary

The government is offering a new alliance to families and businesses with its new economic policy action plan, National Economy Minister Márton Nagy said in a video message on Facebook on Tuesday.

Nagy noted that the action plan was mobilising HUF 4,000bn (EUR 9.63bn), including HUF 2,600bn for families and HUF 1,400 for SMEs.

The action plan includes measures doubling the tax allowance for families raising children, increasing the minimum wage and launching subsidised credit for young blue collar workers, as well as steps to ensure affordable housing, he said. Support for business investments and digitalisation comes in the form of credit, capital and grants in the framework of the Demján Sándor Programme to scale up SMEs, he added.

read also: Hungary falls behind as Romanian and Bulgarian wages surge

Applications for young workers’ credit being accepted

Applications for state-subsidised loans for young blue collar workers are now being accepted, a spokesman for the National Economy Ministry said on Facebook on Tuesday. Andre Palóc noted that the zero-interest credit was available to working Hungarians under the age of 25 ineligible for student loans. Borrowers, who may take out up to HUF 4m, can get two-year grace periods on repayments after the births of their first and second child, and the principal is forgiven after the birth of a third child.

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Tax benefits change, 3rd-country guest workers will earn less in 2025 in Hungary!

Rate of Hungarian wage increase in Q3 third highest in EU

In the third quarter of 2024 the pace of wage increases in Hungary, compared to the same period of last year, was the third highest in the European Union, business news site portfolio.hu said on Tuesday quoting data from Eurostat.

Eurostat data show that in Q3 2024 the hourly labour costs rose by 5.1pc in the EU, compared with the same quarter of the previous year. The costs of hourly wages and salaries increased by 5.0pc and the non-wage component increased by 5.3pc.

In Q3 the highest increases in hourly wage costs for the whole economy were recorded in Romania (+17.1pc), Croatia (+15.1pc), Hungary (+14.1pc).

The non-wage component in Hungary was up 12.8pc in the third quarter, the sixth highest number in the EU. Hourly labour costs were up 13.9pc, again the third highest rate.

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The influx of guest workers in Hungary decreased significantly this year

Many tax benefits will no longer apply to third-country nationals in Hungary from 2025

Hungary falls behind as Romanian and Bulgarian wages surge

In recent years, few economic indicators have captured Hungarian public attention as much as those showing Romania not only catching up to but surpassing Hungary. Two key metrics often cited are GDP per capita adjusted for purchasing power parity (PPP) and household consumption levels. Both reveal Romania’s significant progress over the past decade within the EU rankings.

For those seeking to maintain the perception of Hungary’s economic advantage, fewer and fewer data points remain convincing. However, the macroeconomic figures also hide contradictions—most notably, that Romania’s progress has not been equally shared across its society.

The rise of Romania’s wealthiest

According to the report of G7, over the last decade, Romania’s top earners have made significant strides within EU income rankings. In contrast, middle-class gains have been more moderate, and the poorest 25% of the population remain largely stagnant. EU-wide income percentile rankings illustrate this disparity by ordering the incomes of all EU citizens and comparing individual country groups to the EU average.

For instance, in Hungary, the 90th income percentile moved slightly forward between 2020 and 2023, ranking ahead of 29% of EU earners compared to 28% in 2020. Full convergence, however, would require Hungarian groups to match or exceed their EU counterparts’ rankings—for example, the Hungarian 90th percentile would need to rank above 89% of EU earners.

Romania has exhibited a similar pattern in recent years, with the greatest gains among the upper and middle-income groups. Only the poorest fifth of Romanian society remains firmly at the bottom of EU rankings. In euro terms, which exclude local cost-of-living adjustments, the income growth among Romania’s higher earners is even more pronounced, highlighting a tangible improvement in living standards.

Bulgaria closes the gap

Bulgaria’s standard of living historically attracted little attention in Hungary, but Romania’s leap has shifted the focus. Bulgaria recently surpassed Hungary in household consumption levels (adjusted for PPP), aided by Hungary’s record-breaking inflation. From 2020 to 2023, Bulgaria’s top-earning 50% also advanced significantly in EU rankings, with the wealthiest Bulgarians already ranking among Europe’s highest earners since the start of the decade.

However, PPP-adjusted income data should be viewed cautiously, as figures for both the wealthiest and poorest segments are often less reliable. Still, in euro terms, only the top third of Bulgaria’s population has seen a relative improvement in the EU income rankings.

A three-way competition

In Hungary, only the top 15% of earners saw progress between 2020 and 2023, while lower-income groups largely slipped in the EU rankings. Comparisons between Bulgaria, Hungary, and Romania reveal that Hungary’s advantage now persists only among its bottom 45% of earners,

while the wealthier 55% of Romanians and Bulgarians have overtaken their Hungarian counterparts.

Hungary still holds a slight lead in EU income rankings when measured in euros, disregarding local cost-of-living differences. Government-aligned analysts often emphasise this comparison to downplay Romania’s progress. However, this approach becomes less favourable when Hungary’s figures are compared with those of higher-cost, more developed countries, where Hungary’s lag is even more apparent.

The future of convergence

The rapid pace of convergence in Romania and Bulgaria is undeniable. While their progress is most visible when adjusting for purchasing power, middle-income groups in all three countries now enjoy broadly similar living standards. As these trends continue, the disparities that once defined economic rankings within the region are diminishing, leaving Hungary’s economic edge increasingly tenuous.

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Featured image: depositphotos.com

It’s over: European Commission has decided on Hungarian funds

European Commission has said Hungarian law changes aimed at addressing risks of conflicts of interest regarding “public interest trust” boards were insufficient to warrant the lifting of EU budget conditionality measures.
The measures recommended by the commission “to protect the EU budget from breaches of the principles of the rule of law in Hungary” were adopted on December 15, 2022, by the European Council, the EC noted in a statement.”These breaches related to the areas of public procurement, prosecutorial action, conflict of interest, the fight against corruption and the public interest trusts,” the statement noted.”Hungary formally notified the commission about specific legislative amendments regarding public interest trusts and entities maintained by them” on Dec 2, and asked the commission to propose to the council that the measures be adapted or lifted.The commission said Hungary’s changes to the law did not “adequately address the outstanding concerns on conflicts of interests” regarding the boards, so the measures should remain in place. It added that “adaptations that would be needed to remedy the situation sufficiently” had been outlined to the government.

“Hungary can at any time adopt and notify new remedies to demonstrate to the Commission that the measures adopted by the Council should be adapted or lifted,” the statement said.

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Tax benefits change, 3rd-country guest workers will earn less in 2025 in Hungary!

Péter Magyar: ‘Fake national security review’ distracts as health and economy in ruins in Hungary

Péter Magyar: ‘Fake national security review’ distracts as health and economy in ruins in Hungary

Péter Magyar, the leader of the Tisza party, on Monday lambasted the government’s “bogus national security review” which he said was an attempt to divert attention from growing grocery prices, failing heating systems in hospitals and “the railway system falling apart”.

Magyar: no heating in the hospitals, unbearable inflation

Magyar said in a statement that many hospitals were without heating, and children’s wards were no warmer than 15 C. Meanwhile, the price of flour has grown by 40 percent in a year, that of chocolate by 30 percent and the price of dairy products by 20 percent, he said. He said the rail line between Veszprém and Ajka, in western Hungary, renovated six years ago, had become life-threatening and had to be closed down for six months. In other places, trains cannot travel faster than 10kmh, he added.

“Public services are falling apart, and the state is not functional,”

he added. Meanwhile, “ridiculously, [Prime Minister] Viktor Orbán and others are trying to divert attention from all that by the well-worn method of panic-mongering.” “The government ranting about the threat of terrorism and launching a national security review has in past years directly interfered with the elections of other countries, let two thousand people smugglers go from prisons, invited the former president of Iran to Hungary in secret, allowed heads of state and government with outstanding arrest warrants to stay in the country, rejected the International Criminal Court’s ruling regarding the prime minister of Israel, set free an Azeri axe murderer, directly supported dictators, and sent Hungarian soldiers into zones of civil war,” Magyar said.

Government reacts

Péter Takács, the interior ministry’s state secretary for health care, said in response to the accusation that heating was failing at hospitals. “Magyar started another day with lies and fake news”. Tisza said that the heating had failed at the children’s traumatology ward at Szent János Hospital, but the heating is working there, Takács said on Facebook. The heating system of the entire hospital was revamped this year at a cost of 2.8 billion forints (EUR 6.8m), he said, and the post-reconstruction works would soon be over, “so not even that will inconvenience the sick children”. “Péter Magyar is lying constantly; about hospitals and anything else, without ever considering the consequences,” Takács said.

Magyar responded on Facebook that Takács “has no idea what’s going on in Hungarian hospitals”. The Szent László hospital in Budapest “has no heating, the waiting area for specialist treatments is 16 C, children are lying in their coats in bed on the immunology ward, and the situation is no better at the dialysis and wards.” The hospital’s central heating unit broke down a month ago, and staff were told that repair work would start in January, and “might work again by February”, Magyar said.

Tax benefits change, 3rd-country guest workers will earn less in 2025 in Hungary!

Ukrainian and Serbian guest workers in Hungary should not be worried about the changes; however, Vietnamese, Indian, Kyrgyz, Kazakh, Montenegrin, Venezuelan, etc. employees will earn less if they raise children, are below 25, or get a tax benefit due to marriage.

New rules will decrease the salaries of many guest workers in Hungary

Regarding tax benefits, the Hungarian state is rather generous to families raising three or more children. On the other hand, allowances based on social status are much lower than in most European countries because the Hungarian government believes such financial help should only be given to those who work and, as a result, contribute to the country’s GDP increase.

Although the Hungarian government seemed committed to attracting guest workers to Hungary with several alleviations, a significant change is coming in 2025 thanks to the modification of tax laws in Hungary.

According to Telex, many guest workers will no longer be eligible for family tax benefits, lose the allowance for young couples in first marriage, and can no longer receive the tax benefits for employees under 25.

Hungary"s population Hungary guest workers government ban golden visa guest workers in Hungary third-country nationals' tax benefits
There are around 70 thousand unfilled positions in Hungary. Photo: depositphotos.com

The good news is that the modified tax rules do not apply to guest workers coming from neighbouring countries. Therefore, Ukrainians and Serbians should not be worried. However, all other citizens coming from non-EEA countries should be aware that their revenues may fall next year.

Three types of tax benefits will be unavailable

According to Telex, based on the LV. Law of 2024 about the change of several tax laws, from January, Vietnamese, Indian, Indonesian, Kyrgyz, Uzbek, Venezuelan, Montenegrin, Filipino, etc. workers may earn less. The reason is that they and all other 3rd-country nationals not coming from the neighbouring countries will no longer be eligible for family tax allowance, the allowance for young couples in first marriage, and the tax benefits for employees under 25.

Telex wrote that one of the biggest Hungarian HR companies informed its employees about the changes. That means all of them will have to pay 15% personal income tax and 18.5% social security contribution. The calculation is simple: your gross wage minus 33.5% will be your net salary paid in cash or transferred to your bank account.

This means that if a 3rd-country employee not from neighbouring countries like Ukraine or Serbia is employed for a HUF 450,000 (EUR 1,100) gross wage per month, he gets HUF 299,250 (EUR 731) even if he e.g. raises three or more kids.

Employees raising one kid will get HUF 10,000 (EUR 24) less, and that number increases to HUF 40,000 (EUR 98) in the case of two kids and HUF 99,000 (EUR 242) in the case of three kids. Young employees under 25 will receive 15% less (because they will have to pay personal income tax), while young couples in first marriage will get HUF 5,000 (EUR 12) less.

Stricter conditions to hire guest workers

Earlier this year, the Orbán cabinet introduced stricter rules concerning the employment of guest workers. 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. Moreover, if a Hungarian employer rejects to hire a Hungarian job seeker due to unsupported claims, they should expect sanctions.

According to Telex, employers believe those modifications did not prevent the growth of the number of Asian guest workers in Hungary. FM Péter Szijjártó talked about 128,000 workers from countries outside of the European Union in Hungary in October. Of course, the majority of them are Ukrainians and Serbians. Meanwhile, the number of unfilled positions stood at 71,000 then.

The increase in the number of guest workers flattened

Károly Radnai, the CEO of Andersen Adótanácsadó Ltd, agreed with the abolishment of the tax benefits for 3rd-country guest workers since the government’s aim is not to settle those employees. According to the latest data from the Hungarian Central Statistical Office (KSH), the number of guest workers in Hungary stagnated in the past few months. Telex or the KSH did not give a reason, but it is a fact that the Hungarian government is struggling with multiple structural problems, and GDP growth is expected to be extremely low this year.

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Featured image: depositphotos.com

Hungarian state launches half a billion euro capital programme to support housing

National Economy Minister Márton Nagy announced the launch of a HUF 200bn (EUR 500m) capital program in March to support the construction of dormitories, rental flats, and homes at a press conference on Monday.

Nagy said the scheme’s announcement preceded intensive consultations with property market developers. Participation is open to all funds, open—or closed-end, existing or newly established, until the end of 2025, he added.

The state-owned Hungarian Development Bank (MFB) will invest in the funds only at EUR 73m (HUF 30bn) per fund, and its stake in each fund will be capped at 70pc.

Nagy said the HUF 200bn of capital would give the home market a “big boost” and contribute to GDP growth.

He noted that home sales had climbed by around 40 percent last year, but just 15 percent of home loans were used to buy new homes.

Nagy said the scheme’s timing was intended to bolster the supply side ahead of a large volume of maturing inflation-linked retail government securities in the spring.

He added that the goal was to increase the number of new homes constructed to 25,000 annually, up from around 12,000 in 2024.

read also:

Budapest’s housing crisis in focus: What about the worsening situation in Debrecen?

Shocking: Renting in Hungary’s cities leaves workers empty-handed!

National economy minister meets with business assoc heads

National Economy Minister Márton Nagy met with the heads of business association VOSZ at his office on Monday.

VOSZ president János Eppel and chief secretary László Perlusz discussed proposals to activate Hungary’s labour market reserve with Nagy, his ministry said.

Nagy said local businesses, especially SMEs, needed to become more efficient and boost productivity to preserve the country’s competitiveness and keep up with wage increases.

He asked the VOSZ leaders to participate in the implementation of the Demján Sandor Programme, a government scheme to scale up SMEs.

Demján Sándor Capital Programme to launch with HUF 100bn in February

The Demján Sándor Capital Programme, an element of the Demján Sandor Programme for scaling up local SMEs, will launch with an allocation of HUF 100bn in February, the state secretary for SMEs announced last week.

Richárd Szabados said the programme will provide capital financing to SMEs for expanding their range of business partners and joining new supply chains.

The 8+1 point Demjan Sandor Programme is a part of the government’s New Economic Policy Action Plan.

Szabados said the Demján Sandor Capital Programme was drafted with the participation of National Capital Holding and would be implemented with the support of the Hungarian Chamber of Commerce and Industry (MKIK).

The details of three more elements of the Demjan Sandor Programme will be announced in the coming two weeks, he added.

National Capital Holding CEO Bence Katona said companies could apply for HUF 100m-200m in the framework of the Demján Sandor Capital Programme. The Hungarian Development Bank (MFB) will subscribe to the investment fund units in the scheme, and MKIK will manage the investment fund, he added.

The scheme will not focus on any particular branch of industry, but areas designated in the government’s policy action plan, such as green economy, digitalisation, healthcare, education and sustainable industry, will enjoy an advantage, he said. Purchases of real estate will be excluded from the scheme, but the capital may be used to upgrade or expand property already in use, he added.

The deadline for completing investment projects included in the scheme will be one year, with an option for a six-month extension if justified by the circumstances, he said. He added that the capital could be used for the self-financing requirement for other credit, paving the way for companies to access up to several hundred million forints.

The rate on the state-subsidised capital financing is 5pc. To comply with legal requirements, companies will exchange a token, 1pc equity stake for the financing that carries no right of control and may be repurchased at any time.

Companies with average annual revenue of at least HUF 300m and with at least two people on payroll may apply for the financing.

Orbán cabinet: Budapest ‘can’t get out of paying taxes’

The Budapest municipality is going against the Constitutional Court’s decision, which in October rejected Budapest’s proposal that the solidarity tax the municipality was called on to pay to support poorer localities was unconstitutional, a state secretary of the finance ministry said on Monday.

State secretary András Tállai said that this year, 848 “wealthier” localities paid a solidarity contribution to aid 1,250 localities in performing their tasks. “It is peculiar that it is the richest city of the country, the capital, that finds supporting poorer localities difficult,” Tallai said.

Tallai said government support for local authorities will increase to 1,266 billion forints (EUR 3bn) from 1,050 billion this year, and additional funds will flow into wage costs.

In reaction to Karácsony’s statement that the city would not pay some 50 billion forints in solidarity contribution, Tállai said,

“Everyone has to comply with the law.”

Last week, Budapest Mayor Gergely Karácsony said that in a bid “to retain the municipality’s self-determination and resources,” the city’s budget had been drafted on the assumption that

“Budapest will pay as much solidarity tax to the central budget as it receives from central coffers to finance its services.”

UPDATE

Karácsony: Budapest’s real problem is ‘no money’

Gergely Karácsony, the mayor of Budapest, told a conference on Monday that the capital’s “real problem” was that the municipality had “no money”.

Karácsony said at the Republikon Institute gathering that it was not especially the political gridlock in the assembly or the fact it had been impossible to appoint a deputy mayor that was holding the city back, but rather that it was in the midst of an economic crisis and had fallen victim to a government policy of blackmail.

He said the city assembly was a battleground between its biggest factions, Fidesz and the Tisza Party, both of which exploited Budapest affairs to position themselves ahead of the 2026 general election.

Recent months had shown that

“Fidesz votes no to everything”, so decisions can only be made with the ten-member Tisza faction.

Karácsony said it would be hard to overcome the gridlock if local politicians focused solely on the city’s affairs as even then “the lightning of national politics strikes above us”.

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Hungarian government achieves fiscal balance stabilization this year

The Finance Ministry released preliminary data on Monday showing that Hungary’s cash flow-based general government deficit reached EUR 8bn (HUF 3,284.3bn) at the end of November.

At the end of the month, the central budget had a deficit of HUF 3,257.5bn, the social security funds were EUR 0.55bn(HUF 226.8bn) in the red, and separate state funds were HUF 200.0bn in the black.

Alone in November, the general government deficit came to HUF 233.8bn.

“The government has stabilised the fiscal balance this year while closely following the development of the deficit,” the ministry said. “The government remains committed to improving balance indicators while putting the economy on the sustainable growth path,” it added.

The ministry said interest expenditures reached HUF 3,412.7bn in January-November, climbing by HUF 798.1bn from the base period. It noted that the fall in forint interest rates started in 2023 was delayed in showing up in cash flow-based interest expenditures.

It added that accrual-based interest expenditures will decline substantially in 2025.

The ministry reaffirmed the government’s commitment to reducing the general government deficit to 4.5 percent in 2024, 3.7 percent in 2025, and under 3 percent in 2026.

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Business climate in Hungary remains best, but industrial output down again

Weak car and battery factories, big drought: the Hungarian economy in technical recession

Business climate in Hungary remains best, but industrial output down again

The climate for doing business amid the current circumstances remains the most favourable for big companies, exporters, foreign-owned enterprises and those in the industrial sector, a gauge of sentiment by the the Economic Research Institute (GVI) of the Hungarian Chamber of Commerce and Industry (MKIK) shows. Meanwhile, the industrial output edged down 0.2pc in October. Adjusted for the number of workdays, output dropped 3.1pc.

GVI’s survey of 2,102 managers showed small companies, dependent on domestic sales and businesses in commerce and construction were most exposed to the impact of the economic crisis.

GVI’s confidence index stood at +22 points in October, unchanged from April but three points higher than twelve months earlier.

Industrial output edges down 0.2pc in October

Output of Hungary’s industrial sector inched down 0.2pc year-on-year in October, a first reading of data released by the Central Statistics Office (KSH) on Friday shows. Adjusted for the number of workdays, output dropped 3.1pc. Output of most manufacturing branches rose in October, KSH said. Among the biggest ones, output of the automotive and electrical equipment segments declined, while output of the computer, electronics and optical equipment and the food, beverage and tobacco segments increased, it added.

Business climate in Hungary remains best, but industrial output down again
The inaugurated plant of Alstom in Mátranovák in April. Illustration. Photo: MTI

In a month-on-month comparison, output rose a seasonally- and workday-adjusted 2.0pc. For the period January-October, industrial output declined 3.9pc year-on-year. KSH will release detailed data on output of industrial sector branches on December 13.

German automotive industry is the reason

Commenting on the fresh data, the National Economy Ministry said the month-on-month increase in output was reassuring. It also pointed to the “hectic” international environment as several countries in Europe faced economic and political crises at the same time. German automotive industry companies are scaling back as demand falls, with Volkswagen even planning layoffs, it added. In addition to the impact of the war in Ukraine, the circumstances are impacting the output of Hungary’s export-oriented economy and industry, the ministry said. The performance of Hungary’s industrial sector will improve as big local investments by multinationals such as CATL, BYD, BMW, SEMCORP and EcoPro are completed, it added.

Photo: Facebook/ BYD

Fiscal financing position stable, Orbán government says

Hungary’s fiscal financing position for 2025 is stable and all resources necessary for the New Economic Policy Action Plan are available, Peter Beno Banai, the state secretary for the budget, said presenting the country’s 2025 financing plan on Friday.

All conditions are in place to step up Hungary’s economic growth, Banai said. He added that Hungary had preserved its stable financing in recent years and kept its investment-grade credit rating.

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Car manufacturing in trouble in Hungary? 1 new plant and a new production hall inaugurated just today

Robert Bosch Automotive Steering Ltd inaugurated a HUF 46bn plant in Maklár (NE Hungary) on Friday. Furthermore, SK-Precíziós Szerszámgyártó inaugurates HUF 2.1bn production hall.

The investment was supported by HUF 10.5bn from the state, Minister of Foreign Affairs and Trade Péter Szijjártó said at the ceremony. He added that Hungary’s GDP growth was set to accelerate noticeably in 2025, in part because of automotive industry investments.

In two years, after manufacturing investments by Mercedes, BMW and BYD are completed, he said Hungary would be among five European countries that turn out an annual 1 million cars. Szijjártó noted that German-owned companies employed about 300,000 people in Hungary.

Robert Bosch Automotive Steering Kft managing director Michael Zink said the 37,000sqm multifunctional building would serve logistics purposes and house production of limited series products. The Bosch group in Hungary had net revenue of HUF 2,207bn in the 2023 business year.

SK-Precíziós Szerszámgyártó inaugurates HUF 2.1bn new production hall

German-owned precision tool maker SK-Precíziós Szerszámgyártó inaugurated a HUF 2.1bn production hall in Sárospatak (NE Hungary) on Friday. The state supported the investment, which created 50 jobs, with HUF 750m, Szijjártó said at the ceremony.

The plant is the German owner’s first abroad and creates an opportunity for local suppliers, he added. Last year, bilateral trade between Hungary and Germany reached EUR 70bn, he noted. Over the past ten years, German companies have invested HUF 3,800bn in Hungary, creating almost 40,000 jobs, he added.

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Orbán aims to scale up Hungarian SMEs with EUR 242M

The Demján Sándor Capital Programme, an element of the Demján Sándor Programme for scaling up local SMEs, will launch with an allocation of HUF 100bn in February, the state secretary for SMEs announced on Wednesday.

The programme will make capital financing available to SMEs for expanding their range of business partners and joining new supply chains, Richárd Szabados said. The 8+1 point Demján Sándor Programme is a part of the government’s New Economic Policy Action Plan. Szabados said the Demján Sándor Capital Programme was drafted with the participation of National Capital Holding and would be implemented with the support of the Hungarian Chamber of Commerce and Industry (MKIK).

The details of three more elements of the Demján Sándor Programme will be announced in the coming two weeks, he added.

National Capital Holding CEO Bence Katona said companies could apply for HUF 100m-200m in the framework of the Demján Sándor Capital Programme. The Hungarian Development Bank (MFB) will subscribe the investment fund units in the scheme and MKIK will be in charge of managing the investment fund, he added.

The scheme will not focus on any particular branch of industry, but areas designated in the government’s policy action plan, such as green economy, digitalisation, healthcare, education and sustainable industry, will enjoy an advantage, he said. Purchases of real estate will be excluded from the scheme, but the capital may be used to upgrade or expand property already in use, he added.

The deadline for completing investment projects included in the scheme will be one year, with an option for a six-month extension if justified by the circumstances, he said. He added that the capital could be used for the self-financing requirement for other credit, paving the way for companies to access up to several hundred million forints.

The rate on the state-subsidised capital financing is 5pc. To comply with legal requirements, companies will exchange a token, 1pc equity stake for the financing that carries no right of control and may be repurchased at any time.

Companies with average annual revenue of at least HUF 300m and with at least two people on payroll may apply for the financing.

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Weak car and battery factories, big drought: the Hungarian economy in technical recession

Hungary’s GDP contracted 0.7pc year-on-year in the third quarter, adjusted for seasonal and calendar year effects, a second reading of data released by the Central Statistics Office (KSH) on Tuesday shows.

According to KSH, without adjustments, GDP fell 0.8pc.

Services’ performance and the balance of product taxes and subsidies mitigated the decline by 0.8pp and 0.3pp, respectively. Industry contributed 1.1pp, agriculture 0.6pp, and the construction sector 0.2pp to the decline.

On the consumption side, investments contributed 2.1pp and the trade balance 0.9pp to the decline. Final consumption mitigated the drop by 2.1pp.

In a quarter-on-quarter comparison, GDP dropped a seasonally- and calendar year-adjusted 0.7pc.

In Q1-Q3, GDP rose an unadjusted 0.6pc and an adjusted 0.7pc.

Production approach

The industry reduced its performance by 4.4%, while manufacturing grew by 6.2% compared to the same period of the previous year. Among manufacturing branches, the largest contributors to the decrease were the manufacture of motor vehicles, trailers and semi-trailers and the manufacture of electrical equipment, while the manufacture of rubber and plastic products and the manufacture of food products, beverages and tobacco products slowed the fall in industry the most. The value added of construction was 4.0% and that of agriculture (as a consequence of the drought) 14.9% lower than in the corresponding period of the previous year.

The gross value added of services increased by 1.9% in total. The highest increase (5.9%) occurred in arts, recreation and other service activities. The value added of education was up by 3.8%, that of transportation and storage by 2.8% and the value added of information and communication by 2.6%. The performance of both accommodation and food service activities and financial and insurance activities increased by 2.4%. The value added of human health and social work activities grew by 2.3% and that of real estate activities by 1.2%. The performance of professional, scientific, technical and administrative activities became 0.9%, that of wholesale and retail trade 0.8% and the performance of public administration 0.4% larger.

The 0.8% decrease in gross domestic product in the 3rd quarter of 2024 was reduced by services (by 0.8 percentage point) and the balance of taxes and subsidies on products (by 0.3 percentage point). Industry lowered the performance of the economy by 1.1, agriculture by 0.6 and construction by 0.2 percentage point. Within services, all sections contributed to a similar extent to offsetting the decrease in GDP.

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Expenditure approach

The actual final consumption of households was up by 4.2% compared to the same period of the previous year. Household final consumption expenditure, representing the largest proportion of the components of the actual final consumption of households, rose by 4.5%. The (domestic) consumption expenditure of households realised on the territory of Hungary became 4.1% higher. The volume of domestic consumption expenditure increased in all durability groups: by 1.6% in the case of durable goods, by 4.6% for semi-durable goods, by 4.8% in the case of non-durable goods and by 4.0% for services.

The volume of social transfers in kind from the government went up by 3.3%, while that of the actual final consumption of the government diminished by 1.4%. The volume of social transfers in kind from non-profit institutions serving households (NPISHs) grew by 1.2%.

As a result of the above trends, actual final consumption increased by 3.2%.

Gross fixed capital formation fell by 14.0% in the 3rd quarter compared to the corresponding period of the previous year. Both the volume of investments in construction and that of investments in machinery and equipment went down.

Gross capital formation decreased by 4.9% compared to the same period of the previous year.

As a result of the trends of consumption and of capital formation, domestic use as a whole grew by 0.3% in the 3rd quarter.

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