The Organization for Economic Co-operation and Development (OECD) expects the Hungarian economy to expand by 1.6 per cent in 2026, following a growth of just 0.5 per cent last year, according to their latest economic outlook published on Wednesday.
The Paris-based organization expects that Hungarian GDP growth will accelerate even further to 2 per cent in 2027.
According to the report, household consumption growth is projected to slow down this year despite strong wage increases and reductions in personal income tax. The OECD attributes the moderation to the lingering effects of the energy price increases and the gradual removal of fuel price caps.
After a cumulative 16 per cent decline between 2022 and 2025, investment activity is projected to recover, supported by progress in negotiations over previously blocked European Union funds.
The OECD expects Hungary’s exports of goods and services to remain constrained this year by weak growth in the euro area, increasing by only 0.3 per cent. Export growth is forecast to strengthen to 2.3 per cent in 2027. Imports are projected to rise by 2.6 per cent this year and 3.5 per cent next year.
Inflation is expected to ease gradually, declining from 4.4 per cent last year to 3.8 per cent in 2026 and 3.7 per cent in 2027. Core inflation, excluding food and energy prices, is forecast to fall from 5.2 per cent in 2025 to 3.9 per cent this year and 3.4 per cent next year.
The unemployment rate is projected to increase slightly from 4.4 per cent last year to 4.5 per cent in 2026 before declining to 4.1 per cent in 2027.
The OECD also expects Hungary’s fiscal position to deteriorate in the short term. The budget deficit is forecast to rise from 4.7 per cent of GDP last year to 6.1 per cent in 2026 before narrowing to 5.4 per cent in 2027. Public debt is expected to increase from 74.6 per cent of GDP to 75.5 per cent this year and 75.9 per cent next year.
The organization believes the central bank will keep its benchmark interest rate unchanged during 2026, with rate cuts becoming possible in 2027.
On the global economy, the OECD outlined two scenarios centred on developments in the Middle East.
In its baseline scenario, which assumes the regional conflict is resolved relatively quickly, global GDP growth is projected at 2.8 per cent this year, slightly below the 2.9 per cent forecast in March and down from 3.4 per cent growth recorded last year. Global growth would then accelerate to 3.1 per cent in 2027.
The OECD warned that the conflict has already imposed significant costs on the world economy and is likely to continue affecting economic activity even after hostilities end, as damaged infrastructure and transport routes may take months to restore.
Under a more pessimistic scenario, in which no peace agreement with Iran is reached before 2027, global growth would slow sharply to 2.1 per cent this year and 1.8 per cent next year. The OECD said such an outcome could push several economies into recession or near-recession conditions while increasing unemployment.
The report also cautioned that a prolonged crisis would drive up commodity prices and inflationary pressures. To contain inflation, most central banks would likely raise interest rates by between 50 and 75 basis points before gradually easing monetary policy in 2027 as economic growth weakens.
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