Hungary’s central bank has cut its growth outlook for 2026 while raising its inflation forecast, underscoring a soft patch in the economy even as consumer demand still does most of the heavy lifting. The Magyar Nemzeti Bank now expects GDP to rise 1.8% this year and 2.9% next year, while inflation is seen at 1.8% in 2025 and 3.1% in 2026, a clear deterioration from June’s projections.
Hungary MNB Cuts 2026 Growth View, Raises Inflation
The revisions matter because they point to an economy that is losing momentum just as price pressures are set to re-accelerate next year. For investors, that combination complicates the policy backdrop, weighs on expectations for borrowing costs and leaves Hungary more dependent on households than companies for growth.
Sentiment Indicators
The MNB said the summer drought could knock agriculture’s value added by as much as 15%, shaving 0.4 percentage point off annual GDP. Damage to the Paksi nuclear plant and disruptions on the Rhine are expected to have only limited spillovers, but the drought still adds to the drag from weak investment, which the bank now sees falling 1.8% this year after a poor second quarter.
Inflation is expected to pick up into year-end and approach 2.5% by December, then move above 3% by mid-2027. That is especially important because the bank on Tuesday lowered its inflation target to 2.5% from 3%, tightening the bar for any policy success just as higher energy costs and a tobacco tax increase from November feed into prices.
The forint’s strong rebound in spring has helped contain prices faster than the MNB expected, with food costs falling more sharply in Hungary than in the euro zone and industrial goods inflation also slowing. But the central bank said that pass-through from the currency may now be easing, leaving the next leg of disinflation less certain.
On growth, the bank sees household spending continuing to support the economy while corporate investment remains “painfully” weak. It now expects fixed investment to fall 1.8% this year and says a meaningful recovery is unlikely before 2027, even with 16.4 billion euros of EU funds becoming available.
The MNB also trimmed wage growth forecasts to 9.3% this year and 5.8% next year, suggesting cooling labor-market pressures even as unemployment stays near 4.5% this year and 4.2% in 2026. That points to slower nominal income gains ahead, which could limit consumer demand later on but also reduce pressure on services inflation.
The central bank’s longer-term message is that Hungary’s growth ceiling is getting lower, not higher, as demographic constraints tighten and the labor force offers less room for expansion. That leaves fiscal policy, EU funding and investment execution as the main swing factors for 2026 and beyond.
| Entity | Gains | Losses |
|---|---|---|
| Households | ▲Still drive growth through spending | ▼Slower wage growth ahead |
| Exporters | ▲Benefit from stronger forint easing input costs | ▼Demand stays soft in weak global trade |
| Government | ▲EU funds may support later investment | ▼Bigger deficit path and weaker growth |
| Savers/Consumers | ▲Lower near-term inflation helps purchasing power | ▼Inflation seen re-accelerating in 2026 |
