MBH Bank: 1.1 percent growth expected this year

By: Trademagazin Date: 2025. 05. 21. 12:33

The risks of the tariff war significantly limit domestic growth prospects, while the positive effects of the European economic recovery will only be felt next year, which is why experts at the MBH Analysis Center have lowered their growth forecast for this year to 1.1 percent. The recovery of the domestic economy may begin in the second half of the year, which may also have a positive impact on employment towards the end of the year. Due to the introduction of the margin freeze, lower energy prices and slower-than-expected economic growth, analysts expect an average annual price increase of 4.5 percent. In order to curb inflation, the central bank is expected to wait to start cutting interest rates, which is also justified by the fluctuations in the forint exchange rate. According to experts, the year-end public finance deficit, as a percentage of GDP, will be around 4.3 percent.

The effects of the European economic stimulus are not yet noticeable

After the outbreak of the tariff war, experts at the MBH Analysis Center lowered their outlook for this year’s GDP growth in several stages, from 2.6 percent to 2 percent, and then to 1.1 percent after the weak first-quarter growth data. Among the external factors, the risks of the tariff war play a key role, while the welcome economic stimulus launched in Germany and the related foreign market conjuncture are likely to push economic growth upwards from 2026.

“Among domestic factors, the service sectors collectively contributed positively to Hungarian GDP, while industry and construction continued to show a significant decline. Household consumption acted as a stabilizing factor and is expected to continue to support growth in the future. At the same time, investments may have worsened GDP due to lower capacity utilization, weak external demand and general uncertainty due to the tariff war,”

said Zoltán Árokszállási, Director of the MBH Analysis Center.

Due to the expected easing of global tensions, the start of the European economic recovery, and the activation of large automotive capacities domestically, a small increase in investments and an expansion in consumption, the MBH Analysis Center expects economic growth of 3.5 percent next year and 3.3 percent in 2027.

Employment may start to rise slowly in the second half of the year

In the coming months, uncertainty related to tariffs may also have a negative impact on companies’ investment decisions, but in the second half of the year, the economy may start to recover somewhat, which may also help employment towards the end of the year.

Employment growth is likely to develop slowly, as companies have not laid off workers en masse despite the weak economic situation, so recruitment is not expected to start very quickly when the recovery begins. The average unemployment rate in 2025 may be 4.4 percent, and analysts expect a rate of 4.2 percent in 2026.