Hungarian companies and investors are postponing investments ahead of the crucial April elections, meaning the country’s economic performance for 2026 will largely depend on developments in the second half, leftist daily Nepszava writes on February 4. At the same time, forint assets are staging a staggering rally, fuelled by expectations of a Tisza victory, according to Bloomberg.

The Association of Hungarian Economists organised a panel discussion last week after the release of preliminary Q4 GDP data, which showed that the economy grew 0.2% q/q in the last three months and 0.5% annually, working-day adjusted.

Growth is being held back by weak foreign demand in industry and a lack of new investments, with no major changes expected in the coming months, participants agreed.

Eva Palocz, CEO of Kopint-Tarki economic think-tank, noted that investment activity is likely to remain subdued in the first half of the year due to limited budgetary resources and companies waiting for the elections. Even without a political shift, adjustments in economic policy are still expected, primarily to restore budgetary balance. There was consensus among members, which included MNB director Andras Balatoni and ING Bank senior analyst Peter Virovacz, that fiscal adjustments will be needed in the second half.

As bneIntellinews reported earlier, capital expenditures have been declining since mid-2022 due to a slowdown in EU fund inflows and the government's decision to delay state investments, but businesses have also grown more cautious amid ad-hoc legal changes and an unfavourable business climate

Andras Balatoni described Hungary’s economy as transitional between medium- and high-income levels. Extensive growth has reached its limits, and the country has lagged regional peers since 2022, underscoring the importance of competitiveness and investment. The service sector has increasingly outperformed manufacturing and is also offering growth opportunities to leverage Hungarian talent and increase added value.

“We have reached the point where the interests of domestic small and medium-sized enterprises need to be prioritised,” Palocz said, when she spoke of the government's priorities attracting labour to industrial projects prioritised by the government, which is drawing staff away from SMEs.

Historical experience shows that replacing a long-standing government generally increases deficit and debt risks, although this does not necessarily mean immediate austerity, Peter Virovacz said.

"It is possible, though many investors disagree, that under a Fidesz government, fiscal tightening could occur earlier than under a new government led by Tisza", he added.

Fidesz launched a large-scale communication campaign based on documents Tisza claims were forged by AI, showing that the opposition wants to implement tax hikes and budget cuts and phase out several social benefits and programmes. A first-instance court ruled last month that a 600-page document published in November by the pro-government news site Index.hu, which was presented as outlining the Tisza Party’s alleged economic policy plans, is not linked to the opposition party.

Magyar said the court’s decision confirmed that claims made about the document in recent months were unfounded, adding that Fidesz campaign lies were now in tatters.

“The key question is how markets will respond once the election results are known,” said Péter Virovacz, senior analyst at ING Bank.

"In discussions with foreign investors, some quite extreme scenarios come up. There are views that a Fidesz victory could trigger investor panic and lead to a 10% weakening of the forint. Conversely, others argue that a Tisza win could lead to a 10% appreciation in the currency. Taken together, these scenarios imply a potential EUR/HUF range of 365 to 420," he said.

ING’s baseline forecast places the EUR/HUF exchange rate at around 385 by the end of December, reflecting the central bank’s focus on exchange-rate stability.

 Analysts on the panel expected the economy to accelerate to 1.5-2.5%, well below the government’s 3% target.

In a separate report, Bloomberg writes that foreign investors are increasingly placing bets ahead of Hungary’s pivotal April elections, with market indicators pointing to a potential victory for the opposition Tisza Party

The report cited by liberal Hvg.hu writes that optimism is driven by expectations that a Tisza-led government would unfreeze suspended EU funds, providing a boost to economic growth. According to the report, the BUX index surged 16% in January, marking its strongest monthly gain in five years. The forint has reached a near two-year high against the euro, while the spread between German government bonds and benchmark Hungarian bonds narrowed by one percentage point.

"The market rally reflects the expectation that an opposition victory would bring Hungary back to the EU mainstream, with the resumption of EU funds stimulating the economy. Even if the current government remains in power, no major negative reaction is anticipated, as the status quo would continue," said Viktor Szabó, analyst at Aberdeen Group. He added that political continuity could trigger a modest sell-off, while a clear opposition win might drive a significant market upswing.

One of the Tisza Party’s key campaign pledges is to reclaim €22bnn in frozen EU funds and to begin preparations for euro adoption, Bloomberg adds.

Hungary’s benchmark stock index, with a market capitalisation €68.5bn, continues to hit fresh record highs, extending its rally day by day. After a standout performance in January, gains continued into February, lifting the BUX to a 19% year-to-date gain. The advance has been driven by the four blue-chip stocks: OTP, up 19% so far this year, MOL gaining 38.4%, Richter rising 16%, and Magyar Telekom up 14%.