Amid heightened global instability, central banks in both Europe and the United States have adjusted their economic forecasts—raising inflation projections while lowering expectations for GDP growth.
Speaking at the European Central Bank’s annual conference in Sintra, Portugal, Governor of the Hungarian National Bank (MNB) Mihály Varga emphasized the weight of these developments and highlighted the resilience of Hungary’s financial system.
According to an MNB statement, Varga underlined that in uncertain times like these, the strength and stability of Hungary’s banking sector provide vital support for the country’s economy.
Varga pointed to modest European growth projections, citing the European Commission’s forecast of a 1.1 per cent GDP increase in 2025 and 1.5 per cent in 2026. While the EU economy has proven resilient, the Commission sees risks skewed to the downside.
Reflecting these concerns, the Hungarian central bank has revised its own expectations. The MNB now forecasts 0.8 per cent GDP growth for Hungary in 2025. Varga attributed the muted growth to global uncertainty, particularly disruptions in world trade, shifting supply chains, evolving US trade policies, and escalating geopolitical tensions. Nonetheless, he noted that Hungary’s slight growth outlook is underpinned by increasing domestic consumption and a robust labour market.
The Sintra conference also allowed central bank leaders to address supervisory and regulatory issues within the banking sector.
Varga stressed that despite mounting global tensions, Hungary’s banks remain well-capitalized and highly liquid. He said the MNB is actively collaborating with domestic banks to stimulate corporate lending—an essential pillar for long-term economic growth.
‘The banking sector has not only supported economic performance across Europe in recent years but has also become more resilient in the face of crises,’ he remarked.
As central banks around the world recalibrate their strategies, Hungary continues to focus on internal economic drivers while leveraging its stable financial system to navigate external shocks.
Related articles:
