Hungary's economy is in a deep crisis - in 2023 the country fell into recession, and last year it was in stagnation. And this is not typical for this country, which has been accustomed to dynamic growth since the political changes, notes in its analysis "Die Welt". The economic catch-up, which was supposed to bring Hungary closer to the prosperous Western countries, is stalling. It is now clear that Orbán's strong state and his authoritarian political style have brought the country economic success in recent years, but in the long term they threaten economic development.
What is the Hungarian economy suffering from?
Previously, ultra-low interest rates, large foreign investments and billions from European funds managed to cover up the country's structural deficits, but today the weaknesses are becoming more and more apparent, as Die Welt emphasizes.
Now Hungary's economy suffers mainly from the fact that companies are investing less due to the lack of security. Investments have recently fallen by 11 percent. During Viktor Orbán's rule, small and medium-sized enterprises got used to the state supporting them - so now they are waiting and hoping for new support programs and favorable loans, as in the years before the pandemic.
"Unfortunately, the government plays an excessive role in the Hungarian economy," says economist David Nemeth, quoted by "Die Welt". "It is much more dominant than in most EU countries."
For now, however, the support coming from the government is falling away, as it has to save. Interest rates have risen sharply, and the Central Bank, which is supposed to stabilize the Hungarian currency, has almost no way to alleviate the situation. Added to this is the weakness of central export markets such as Germany, as well as the weakness of the automotive industry. In recent years, foreign investment has been directed mainly to the automotive industry, but the crisis in the sector is having its effect. And the difficult situation in the affected export industry weighs doubly on the economy: industrial production has fallen, and the affected companies are not investing.
Tax policy complicates the situation
Both consumers and companies are also suffering because of Orbán's tax policy, Die Welt also writes. Since 2010, many extraordinary taxes on profits have been introduced, affecting mainly foreign companies. This was initially announced as a temporary measure, but it has long since become permanent - for banks, supermarkets or energy companies. The German publication also gives an example - with the Austrian supermarket chain "Spar", for which, due to the additional taxes in question, business in Hungary has already become unprofitable.
The unpredictable economic policy repels investors. "Companies cannot plan and invest if they don't know whether the government will impose a new tax on them in six months", says economic analyst Peter Wirovac of the ING banking group.
Consumers are also affected - as additional taxes have an impact on prices, in parallel with high inflation. In the past two years, food prices in Hungary have increased by up to 50 percent. And even rising wages and a higher minimum wage cannot compensate for the loss of purchasing power, which is felt especially by people with low incomes.
For now, there is no improvement in sight, predicts "Die Welt". Inflation for December was surprisingly high compared to the previous year - 4.6 percent. The weak forint is mainly the reason for the increase in the prices of imported goods.
The German publication recalls that in addition to all this, Brussels has frozen 22.5 billion euros of funds earmarked for Hungary, as the country violates essential principles of the rule of law and does not make sufficient efforts in the fight against corruption. And one billion of these funds have already been completely lost. "Die Welt" points out that these funds are important for the Hungarian economy - in 2023 it ranked fourth as a net recipient of European money, and Orban also depends on them.
"Orban's regime needs this money to strengthen its power and to thank its supporters," says Daniel Freund, an MEP from the Green Party in Germany. According to him, Orban strengthens his power mainly thanks to EU funds. And in a little over a year, the country will hold parliamentary elections.
The Economy and Elections in Hungary in 2026
If the economic stagnation continues, Orbán's party is threatened with losses, predicts "Die Welt". That is why the government is making efforts to counteract this development. "The government wants to inject as much money into the economy as possible shortly before the elections, to make voters think that it is flourishing," says David Nemeth. It is with this aim that a number of measures have been taken, the impact of which will only be seen in the second half of 2025 - for example, tax breaks for families and subsidized loans for small businesses. And of the almost 35 billion euros originally planned to be frozen, Brussels has nevertheless released 12 billion - they should support public and private investment. Therefore, economists assume that the economy will strengthen over the course of the year.
At the same time, Orban is seeking to strengthen his positions internationally - mainly thanks to his closeness to Donald Trump, notes "Die Welt". But whether his calculations will work out will become clear in the coming months, the German publication writes.