Even National Bank Governor Varga acknowledges that the Orbán cabinet’s economic figures are incorrect
According to Mihály Varga, the governor of the Hungarian National Bank, the full-year GDP growth this year will be only 0.8%. The Hungarian government had previously talked about a flying start and 4% growth. Furthermore, the National Bank projects GDP growth of only 2.8% even in 2026.
Risk of GDP decline and inflation surge, says central bank Governor Mihály Varga
The National Bank added that the inflation rate could “decline persistently” to the tolerance band in early 2026 and reach the 3% inflation target in early 2027. The inflation report puts average annual inflation at 4.7% for 2025 and 3.7% for 2026.
The Hungarian National Bank expects a gradual recovery in H2 2025 and puts full-year GDP growth at 0.8%. It projects GDP growth of 2.8% in 2026. The Monetary Council said the baseline scenario in the report was surrounded by mostly upside risks to inflation and downside risks to growth.
At a press conference yesterday, Governor Mihály Varga said growth in household consumption was “vigorous,” but the decline in investments was “prolonged.” He said that mandatory and voluntary price restrictions had played a “significant” role in mitigating inflation, but also highlighted “strong repricing” among companies.
Varga said incoming macroeconomic data had been within the NBH’s forecast range. He added that households’ inflation expectations had diminished but were still high. He said the NBH could contribute to anchoring inflation expectations and achieving the inflation target sustainably by “ensuring a positive real interest rate.”
Investors hoped for better
According to Péter Virovácz, a senior analyst at ING Bank, they expected a better economic performance in 2025. He highlighted that the Hungarian economy has not stagnated for such a long time since the regime change in 1989-1990. The stagnation started after the April 2022 general elections. Virovácz added that without government caps and profit maximisation, inflation would be above 5% with a declining labour market. That is not surprising because investment figures have been poor for years.
Virovácz said Hungary could be happy if GDP growth were around 1%, contrary to the central bank’s 0.8% prognosis. 1% is not catastrophic; the growing inflation makes it destructive. He added that frequent government interventions in the Hungarian economy deteriorate investors’ trust because they believe the Hungarian economy must be in great trouble if the administration intervenes in so many sectors.
Consumer confidence in the negative range
He added that there was a chance that 2026 and 2027 would bring perceptible economic growth, mainly due to the expanding German economy (e.g. they announced a multi-billion-euro armament programme).
Virovácz said consumer confidence has been measured in Hungary since 1993, and it was positive for 18 months. However, before the elections, it regularly increased, but “now that kind of upsurge is missing,” and it is in the negative range.
He added he would not be surprised if the government’s market price markups remained in effect until next May.
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