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Hungary's economy unexpectedly slipped into recession in the third quarter, as domestic consumption could not offset a significant slump in industrial production.
Preliminary data from the statistics office, released on Wednesday, showed that the gross domestic product contracted by 0.7% between July and September compared to the previous quarter.
Economists surveyed by Bloomberg had forecast a modest growth of 0.1%.
This decline comes after a contraction in Q2, marking Hungary's first recession since early 2023. According to a statement from the Budapest-based statistics agency, weak performance in the industrial and agricultural sectors reduced economic output by 2 percentage points in the third quarter, while the services sector helped moderate the overall downturn.
“Nobody expected the economy to perform so poorly. It seems like to reach its goal for next year’s growth, the government would have to implement a new stimulus package, but that would put the budget deficit target into question,” said ING Bank Hungary economist Peter Virovacz.
The Forint has fallen to its lowest level against the Euro since December 2022, undermining the central bank's efforts to continue reducing interest rates, which, at 6.5%, remain the highest in the European Union, Bloomberg reports.
Economy Minister Marton Nagy had cautioned that GDP would likely fall short of projections, attributing Hungary’s economic struggles to stagnation in Germany, its largest export market.
To revive the economy ahead of the 2026 elections, the government is now developing stimulus programs.
“A big jump in economic performance can only be expected in the third quarter of 2025,” Nagy said in a statement following the release.