However, policy moves like this come at a cost, and right now, Hungary’s economy is struggling. Growth in 2024 was undermined by weak manufacturing orders, and is looking set to expand by a mere 0.5 to 0.7 percent. This is in stark contrast to the government’s original target of 4 percent and its recent prediction of 1.5 percent.
Moreover, inflation looks set to rise further, and the forint continues to slip — albeit with bouts of some recovery in the last three months — with added inflationary implications. These concerns have constrained the central bank from reducing its base rate below the 6.5 percent first reached in September.
In his public rhetoric, Orbán continues to blame the war in Ukraine for dampening current demand in the EU, and thus causing Hungary’s economic stagnation. But rather than looking at the current gloom, he’s betting on a significant upturn in 2025.
Orbán believes that having Trump back in the White House will be a catalyst for global economic growth, in large part because the U.S. president will rapidly stop hostilities in Ukraine. And he expects the resultant drop in military spending to be redirected toward consumption — a scenario that ignores Trump’s threat to slap tariffs on U.S. imports from the EU.
The Hungarian prime minister is also betting on numerous investments in the automotive sector — notably, Chinese-owned electric vehicle battery plants — coming online in 2025 and acting as a driving force to boost exports.
However, most independent analyses are less sanguine, with the European Commission putting 2025 growth between 2 to 2.5 percent.
