(Bloomberg) -- Hungary’s annual economic growth will be “close to zero” in the third quarter, Economy Minister Marton Nagy said, in the latest sign that the country’s downturn is deeper than previously thought.
The data, which will be published on Oct. 30, is poised to miss market forecasts, Nagy warned at a conference organized by Portfolio news website on Thursday. The median estimate in a Bloomberg survey projects an expansion of 1.8% in the July-September period.
The latest forecast raises the specter of a renewed recession after the economy already posted a quarterly contraction in the previous three months. Nagy blamed the economic woes on the stagnation of Germany, Hungary’s biggest export market.
Prime Minister Viktor Orban is scrambling to kickstart the economy in the run-up to the 2026 elections, with the ruling party and the main opposition group running neck-and-neck in the latest polls. The European Union continues to withhold about €20 billion in funding earmarked for Hungary because of graft and rule-of-law concerns.
Stimulus Plan
The cabinet approved a 21-step economic program this week, aimed at stimulating the economy, particularly the housing sector. The program includes a plan to allow Hungarians to dip into their private pension funds without a tax penalty for property purchases and renovations.
Hungary’s Orban Sees Economic Upswing From First Quarter of 2025
The conference where Nagy was speaking showed palpable signs of frustration with Orban’s economic policies. The cabinet has a track record of missing economic growth targets, overshooting budget deficit goals and plugging shortfalls with a wide range of corporate levies.
Sandor Csanyi, the head of OTP Bank Nyrt., Hungary’s biggest lender and one of the largest in central and eastern Europe, decried the extra charges on the sector as “unfair” and blamed the government for shortcomings in economic management.
He said the government went back on a pledge to phase out the extraordinary bank levy, while a decision to boost a transaction tax particularly handicapped local lenders against digital banks like Revolut Ltd, which don’t have to shoulder the same taxes.
(Updates with economic program in fifth paragraph, OTP Bank CEO from sixth.)
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