Waiting for GDP growth: the Hungarian economy recovering from an uncertain situation

By: Trademagazin Date: 2025. 01. 27. 12:33

The Hungarian economy is expected to start growing more strongly in the second half of 2025. Equilor Investment Co. forecasts that GDP will grow by 2.2% this year and by 3.4% next year, which is somewhat more pessimistic than the market consensus. The key factors for economic growth may be domestic consumption and agriculture, while large-scale investments in the automotive industry will also have a significant impact, an article by VG points out.

BYD, BMW and CATL plants are expected to start production in the second half of the year, which could give a new impetus to GDP. However, it is questionable whether there will be sufficient demand for the batteries produced by the plants and to what extent they will rely on Hungarian suppliers. External demand may remain low, which may narrow export opportunities, while the increasing import demand for domestic consumption and investments will worsen the foreign trade balance.

Inflation remains a risk, especially in connection with the weakening of the forint. Equilor expects a 4% consumer price index this year, but the Magyar Nemzeti Bank may have the opportunity to cut interest rates in the second half of the year. Although external uncertainties, such as the slow recovery of the eurozone, may pose a challenge, the increase in real wages and the consumption stimulus from interest payments on premium Hungarian government securities can help economic growth.

The success of automotive investments and the recovery of domestic demand will determine the extent to which the economy can take advantage of the favorable developments.