Hungary is poised for a significant economic turnaround in 2025, with at least eight key indicators pointing to a shift towards sustained growth, according to Hungarian Minister for National Economy Márton Nagy. Speaking at the Companies for the Future Award gala in Budapest, he outlined the factors contributing to this transformation, including strong employment figures, real wage growth, rising consumption, and industrial expansion.
One of the most promising signs of economic recovery is the high employment rate. According to Nagy, 4.7 million people are currently employed in Hungary, with a low unemployment rate reinforcing labour market stability. Furthermore, real wages are expected to rise by 5 per cent this year, following a 9 per cent increase in 2023.
Another vital factor is the resurgence of domestic demand. Consumption levels are increasing significantly, the tourism industry is booming, and the real estate sector is experiencing heightened activity. The construction industry, in particular, is showing strong momentum, with order volumes growing by over 16 per cent, while the automotive market has also seen a revival. Minister Nagy highlighted that industries driven by domestic demand—such as construction, pharmaceuticals, logistics, and food production—are expected to lead the recovery. These sectors, he noted, will be the first to demonstrate a tangible economic turnaround. Meanwhile, industries reliant on external demand, including export-driven manufacturing, will depend on the broader recovery of the European economy and its ability to restore competitiveness.
‘The minister also emphasized Hungary’s commitment to reducing corporate taxes, particularly for families’
The government is implementing measures to ensure the continued expansion of small and medium-sized enterprises (SMEs). This includes making loans more affordable and introducing further tax reductions. Nagy announced that the government is considering raising the eligibility threshold for the small business tax (KIVA) to support business growth.
The minister also emphasized Hungary’s commitment to reducing corporate taxes, particularly for families. A major tax reform proposal aims to reduce personal income tax (PIT) for families with children from 15 per cent to zero. From 1 October, mothers with three children will be exempt from PIT—a policy expected to benefit 250,000 families and cost the state budget 170 billion forints annually. The existing tax exemption for mothers with four children will remain in place, impacting 70,000 families at a cost of 50 billion forints per year. Additional plans include extending tax exemptions to maternity benefits such as CSED and GYED, affecting 30,000–40,000 mothers annually.
Despite previous success in reducing inflation, the minister acknowledged a recent resurgence. He described inflation as ‘the worst thing in the world’ and highlighted the government’s efforts to combat rising food prices. The administration is in discussions with major retail chains to stabilize food inflation, and if agreements are not reached, price controls may be introduced. Measures under consideration include capping profit margins on essential goods and expanding government-imposed price limits.
Additionally, pensioners will benefit from a VAT refund scheme starting 1 October. The initiative will allow retirees to reclaim VAT on essential food items such as fruits, vegetables, and dairy products, with refunds issued within 30 days of purchase.
A key pillar of Hungary’s industrial strategy is the establishment of 100 new factories. The minister stressed that while the automotive industry remains central, other high-value sectors, such as pharmaceuticals and food processing, will receive increased focus. The goal is to expand Hungary’s industrial base, ensuring long-term economic stability and global competitiveness.
Related articles:
