Hungary Government Cuts 2025 GDP Growth Forecast to 1%

Hungary's economy showed modest growth in the second quarter of 2025, expanding by 0.2% year-over-year and 0.4% quarter-to-quarter, primarily driven by the services sector, especially information and communication. However, the agricultural and industrial sectors weakened overall growth, with the economy avoiding a technical recession after a first-quarter contraction. Despite this, the government has significantly lowered its GDP growth forecast for 2025 from an initial 3.4% to just 1%, reflecting ongoing economic challenges ahead of the upcoming elections. Economy Minister Marton Nagy highlighted that growth is expected to remain near stagnation for the year, with weak farm output and industrial production contributing to the slowdown. The downgrade aligns with projections from the Hungarian central bank and the OECD, and political uncertainty along with government interventions have also impacted business confidence. Prime Minister Viktor Orban is responding with tax cuts, loan incentives, and pension increases to mitigate the economic difficulties and bolster his position before the elections.