Hungary’s medium-term economic plan until 2027

This is an article about Hungary’s medium-term fiscal-structural plan. The plan includes the net expenditure path, macroeconomic assumptions, and fiscal and structural measures. The aim of the plan is to meet the fiscal requirements of the new economic governance framework.

The macroeconomic forecast underlying the plan predicts that the Hungarian economy will grow by 0.8% in 2024, 3.4% in 2025, and above 4% between 2026 and 2028. The consumer price index is expected to be 3.7% in 2024, 3.2% in 2025, and around 3% from 2026 onwards. The GDP deflator is expected to be 8.0% in 2024, 4.0% in 2025, and around 3.2% between 2026 and 2028.

According to the fiscal commitment made in the plan, net expenditure will increase by an average of 4.7%. The deficit will be 3.7% in 2025 and below 3% from 2026 onwards. The structural balance will gradually improve from -2.7% in 2025 to -1.5% by 2028. Government debt will remain on a downward path, decreasing by an average of 1.4 percentage points per year.

Despite the challenges of recent years, the Hungarian economy has maintained its previous achievements and strong fundamentals. Following the Covid crisis, the Hungarian economy was one of the first to recover. Record growth of 7.1% was recorded in 2021, followed by a 4.3% expansion of Hungarian GDP in 2022. Despite the economic difficulties caused by the Russian-Ukrainian war, the Hungarian economy grew by 1.5% in the first half of 2023.

Several factors support the dynamic growth processes, including the manufacturing investments announced in recent years and currently underway, the recovery of activity in the corporate sector, and the revival of household investments. Disciplined fiscal policy can also contribute to investments from 2025 onwards, mainly through infrastructure developments.

The government remains committed to supporting families, preserving the value of pensions, and maintaining the reduction of household utility costs. In addition, strengthening national defence capabilities is also a key objective. Reducing external exposure, keeping the foreign exchange ratio low, and increasing the remaining maturity of debt continue to be strategic directions in Hungarian public debt management.

The government supports the population’s energy efficiency investments with the new home renovation program, which was launched in July 2024. The aim of the support is to reduce energy consumption in the household sector. Similar to previous years, new support programs will be launched to improve the energy efficiency of buildings. In order to increase the number of rental apartments, the purchase and renovation of at least 1,600 apartments and the construction of at least 400 new social rental apartments are planned by 2026 as part of the RRF project.

The framework for the Hungarian government’s efforts towards social inclusion continues to be defined by the Hungarian National Social Inclusion Strategy 2030, adopted in 2021. The aim of the strategy is to reduce poverty, prevent its reproduction, and improve access to socio-economic goods. The first action plan defines the tasks until 2024, and the continuation of the implementation of the strategy is expected in 2025-2027 based on a new action plan.

It can be concluded from the text that the ambitious economic development featured in the daily communication of politicians is not expected in the medium term, in the period up to 2027.