Hungary’s economy is showing tentative signs of recovery after stagnating through much of 2024, weighed down by sluggish demand from key eurozone trading partners. Yet, the broader outlook remains lackluster.
Fresh data released by the country’s statistical office this week revealed that gross domestic product (GDP) grew by 0.5% in the fourth quarter compared to the previous three months, officially pulling the country out of recession.
“Even so, the overall picture still isn’t looking too rosy, and the economy as a whole is lacking a strong positive momentum,” economists at ING Bank in Budapest noted in a research report. While the quarterly growth rate is a welcome development, the seasonally and calendar-adjusted year-on-year GDP increase was a mere 0.2% - a tepid result that underscores the slow pace of Hungary’s economic rebound.
Hungary’s economic woes in 2024 stem largely from a sharp drop in demand from Germany, its largest export market, coupled with restrained domestic consumer spending. Inflation, which had momentarily cooled to within the central bank’s 3% target range last year, has since edged up again, fueling uncertainty among households. Many Hungarians are prioritizing rebuilding their savings over discretionary spending, dampening retail activity and further weighing on growth.
The sluggish recovery presents a challenge for Prime Minister Viktor Orbán, who is keen to stimulate stronger economic momentum ahead of critical elections in just over a year. So far, the numbers are not in his favor.
“GDP growth for 2024 as a whole was only 0.5%, well below expectations from the start of the year. More worryingly, this is the second year in a row that economic activity has delivered a significant negative surprise compared with earlier expectations. All in all, our hopes for 2025 are looking slim,” the ING analysis noted.
Despite the subdued growth figures, the Hungarian government remains optimistic, with the Economy Ministry declaring that the country has “turned a corner.” Officials point to improving consumer confidence as a sign of better times ahead and predict that GDP growth could exceed 3% in the latter half of 2025. However, many economists remain skeptical. According to a Bloomberg survey, Hungary’s economy is projected to grow 2.5% this year - well below the government’s 3.4% forecast.
A major concern is Hungary’s reliance on exports, particularly to Germany’s car industry. The government is banking on three major industrial investments - new local plants from BMW, BYD, and Chinese battery manufacturer CATL - to help reignite growth. Yet, even with these projects in the pipeline, a broader uptick in demand will be crucial to sustaining economic expansion.
The specter of inflation continues to loom over Hungary’s economic prospects. While wages are rising in real terms, persistent price pressures may curb retail sales going forward, adding another layer of complexity to the recovery. Policymakers at the central bank have already described inflation’s recent rebound as a “warning sign,” signaling potential headwinds in consumer-driven growth.
Compounding the challenge, Orbán’s administration faces tighter fiscal constraints than in previous election cycles. In 2022, the government embarked on a record spending spree to secure its fourth consecutive parliamentary majority. This time, with limited fiscal space, the scope for similar pre-election stimulus measures appears much narrower.
For now, Hungary’s economy is treading a fine line between gradual recovery and prolonged stagnation. While the latest figures suggest the worst may be over, sustained growth will require more than just cautious optimism - it will demand structural improvements, stronger external demand, and a steady hand in economic policy.


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