Hungary's economy grew by 1.5% in the third quarter: Inflation stands at 1.6%, and the key interest rate is 5.5%

Hungary's economy grew by 1.5% in the third quarter of 2026 compared with the same quarter a year earlier. The Central Statistical Office (KSH) reported this on October 30 in its initial estimate. Compared to the second quarter, economic output rose by 0.1%. In the first nine months, GDP increased by 1.7% compared to the same period last year. Analysts had expected an average of 0.2 percentage points more.

Industry Drives Growth, Drought Slows It Down

According to the KSH, industry was the main driver of growth. The agency points to new capacity resulting from major investments in previous years and improved capacity utilization. Vehicle production and the manufacture of computers, as well as electronic and optical products, performed particularly well.

Agriculture slowed growth. A drought caused output to drop significantly. In the second quarter, agricultural production had already fallen by 12.4%, while industry had grown by 3.7%. The services sector remained a stable contributor to growth.

The KSH warns that the initial estimate is still subject to revision. This applies particularly to the agricultural data. The agency has also raised its GDP forecast for 2025 to 87.308 trillion forint, an increase of 0.3% compared to the March figure.

Inflation Well Below Target, Key Interest Rate Well Above

Consumer prices rose by 1.6% in September compared with the same month a year earlier. In September 2025, the rate was still at 4.3%. Core inflation fell to 1.9%. Prices for services rose by 4.9%, while food prices fell by 1.3%. Household energy prices fell by 0.4%. Compared to the previous month, prices rose by 0.2%. Industrial producer prices, however, rose by 6.9%, the KSH reported on October 29; the month-over-month increase was 1.6%.

The central bank, the MNB, lowered its key interest rate by 0.25 percentage points to 5.5% in August. On October 20, it left the rate unchanged. A year ago, the rate stood at 6.5%. The MNB expects inflation to remain below its target through the end of 2027.

The Monetary Council’s statement of August 25 reads (translation from English): “The rate of price increases remains below the central bank’s 3% target.” This quote predates the September data. Since then, inflation has risen from 1.2% in July to 1.6% in September.

What this means for German companies

German automotive suppliers are finding a market in Hungary that is driven by vehicle production. Demand for electronics and intermediate goods is supporting business. However, the weak quarterly increase of 0.1% calls for caution when planning volumes.

With inflation at 1.6%, investors are paying a key interest rate of 5.5%. This results in a high real interest rate and expensive loans in forint. Anyone selling or financing in forint should hedge against exchange rate risk.

Sources: KSH, MNB, ING Think, Budapest Business Journal (all EN)

SK, Frankfurt