The Executive Board of the International Monetary Fund (IMF) has completed its 2025 Article IV Consultation with Hungary. The Hungarian authorities have agreed to publish the Staff Report from this consultation.
Hungary’s economy is facing ongoing difficulties. Economic output has remained flat over the last three years, and inflation continues to exceed the central bank’s 3 percent target. Regulatory measures such as price controls, interest and margin caps, windfall taxes, and subsidized lending have contributed to market uncertainty. Although fiscal adjustments have been made in recent years, public debt remains high due to increased financing costs.
Looking ahead, domestic and external uncertainties are expected to persist. The IMF projects that Hungary will see modest growth of 0.7 percent in 2025, mainly driven by consumption and supported by positive wage trends. Growth is forecasted at 2 percent for 2026 as investment recovers and German fiscal expansion provides a boost. Inflation is anticipated to be at 4.5 percent in the fourth quarter of 2025 before gradually decreasing toward the central bank’s target by 2027. Current policies are expected to keep the fiscal deficit around 4½ percent of GDP through the medium term, with public debt projected to reach about 79 percent of GDP by 2030.
Risks remain skewed downward for Hungary’s economic outlook. Factors such as increasing geoeconomic fragmentation from new trade measures, regional conflicts, lack of credible fiscal adjustment, or loss of EU funds could all pose significant threats.
Following their assessment, Executive Directors largely agreed with staff conclusions on Hungary's situation:
They “welcomed Hungary’s economic resilience but noted that the outlook remains subdued amid weak investment and above target inflation.” Directors pointed out downside risks and high external uncertainty: “Directors stressed the need for strong reform efforts to promote macroeconomic stability, rebuild buffers, and boost productivity.”
Fiscal policy was a focus area for Directors: “Directors emphasized the importance of additional fiscal effort to rebuild fiscal buffers and ensure debt sustainability.” They supported Hungary’s goal for a structural primary surplus in order to reduce deficits and lower public debt: “They welcomed the authorities’ medium term goal of achieving a structural primary surplus...In that context, Directors underscored the importance of high quality fiscal adjustment.” They recommended broadening the tax base through fewer exemptions while rationalizing spending—especially on energy subsidies—and redirecting savings towards targeted social support.
On monetary policy, Directors called for continued tightness until inflation returns to target levels: “Directors agreed that the monetary policy stance should remain tight to return inflation to target.” They advocated a data-driven approach given ongoing uncertainty and encouraged maintaining exchange rate flexibility alongside adequate reserves.
Regarding financial stability, they observed that while banks are well-capitalized and profitable there are still vulnerabilities—such as corporate sector risks or growing sovereign exposures—that warrant close monitoring: “Directors considered that the financial sector is broadly sound but urged continued vigilance.” Housing incentives should be phased out gradually; changes in macroprudential measures should only occur if justified by financial stability concerns.
Structural reforms were also highlighted: “Directors emphasized the need for structural reforms to boost productivity and competitiveness,” including improvements in energy security through greater renewable use as well as governance reforms aimed at making business conditions more predictable so EU funding can be unlocked.
Under Article IV consultations like this one https://www.imf.org/en/About/Factsheets/Sheets/2016/08/01/16/48/Article-IV-Consultations , IMF teams visit member countries each year to review their economies through discussions with officials before presenting findings for discussion by its Executive Board.
A summary table released alongside this report shows projections indicating gradual improvement in GDP growth rates over coming years—from an estimated rise of just 0.7% in 2025 up toward approximately 2% per year after—and steady progress toward meeting inflation targets.