Erste Bank Puts 2026 GDP Growth at 1.7%

Erste Bank Hungary analysts put Hungary's GDP growth at 1.7% in 2026 and 2.2% in 2027, the lender said in a forecast on Thursday.

The bank's analysts put a protracted conflict in the Middle East, tensions over tariffs, the impact of drought on the farm sector and a summer energy crisis among downside risks. On the upside, they see improving export prospects contributing to a pickup in industrial output.

Household consumption, supported by real wage growth, is set to remain the engine of economic growth.

The bank’s macroeconomic analyst, János Nagy explained that consumer confidence has risen to a multi-year high, while business expectations have not improved significantly this year. As consumer confidence improves, retail sales volume is increasing, which could provide a stable foundation for growth throughout the year.

Inflation continued to ease in the first half of the year, with the annual consumer price index falling from 2.1% in January to 1.3% in August – a nearly ten-year low. The expert noted that, in addition to administrative price controls, the strong forint also played a significant role in this slowdown.

The drought and energy prices have not yet led to a spike, but a turnaround is already visible. Producer prices have begun to rise, which could affect consumer prices within a few months. In the coming months, the inflation rate is expected to rise gradually, though the pace of acceleration will be much more moderate than previously anticipated, he said.

Erste’s chief macroeconomic analyst, Orsolya Nyeste noted that between June and August, the Hungarian National Bank (MNB) cut the base rate by a total of 75 basis points, from 6.25% to 5.50%. However, uncertainty regarding the future path of interest rates has increased.

Inflation data remain favorable overall, but the escalation of the conflict in the Middle East in recent weeks, turbulence in global bond markets, and a more volatile forint may prompt the central bank to adopt a wait-and-see approach for the time being.