Hungary's economy grew by just 0.1% quarter on quarter in the third quarter, well short of forecasts, the statistics office KSH said in its flash estimate on October 30.

Output was 1.5% higher than a year earlier on both raw and seasonally adjusted data, down from 1.7% y/y in the second quarter. Growth over the first nine months came to 1.7% y/y. Industry was the main contributor, services also added to growth, and agriculture held it back significantly, KSH said. The flash gave no expenditure breakdown; the second estimate is due on December 1.

The economy has now undershot expectations for two quarters running, after a positive surprise in the first quarter, though it has also grown for six quarters in a row. ING had expected 0.2% q/q, and the bank's forecast of 1.9% average growth for 2026 now needs a clear acceleration in the final quarter. The mix is also unusual: services have long been the main, and sometimes the only, engine of Hungarian growth, while this time industry did the heavy lifting.

Hungary's real GDP growth, % y/y, 1Q22-3Q26; 3Q26 is the KSH flash estimate. Source: KSH via IntelliNews Lambda

Agriculture's drag was expected after a summer of drought and heatwaves, but given the sector's small weight in the economy its output must have fallen sharply to pull growth down this far, according to Peter Virovacz, ING's chief economist for Hungary, in a note on October 30. Farm output had already collapsed by 15.6% q/q in the second quarter, when household consumption carried growth.

Stronger industry should have lifted exports, as the better-than-expected trade data suggest, but its low domestic value added limits its contribution to GDP. The source of the miss "should be sought primarily within the domestic economy rather than abroad", ING said.

Consumption probably remained the main driver on the expenditure side, though more weakly than record-high consumer confidence implies, while investment may have shrunk again on a quarterly basis, held down by slow publicly funded projects and companies waiting out geopolitical, energy-market and economic-policy uncertainty, according to ING. Fixed investment was already down 3.6% q/q and 6.3% y/y in the second quarter, KSH data show, extending a decline that has dogged the economy for more than two years.

ING is keeping its 1.9% call for now, relying on a recovery in investment, further growth in consumption and a better contribution from net exports in the fourth quarter. "A single engine will no longer be enough to ensure a strong finish to the year," the bank said, citing downside risks from the Middle East, the US midterm elections and France's political and market troubles.

Local forecasters are clustered at similar levels: MBH Bank raised its 2026 forecast to 1.8% in September, after analysts had cut their projections on a lacklustre end to 2025. The central bank, which left its base rate at 5.5% on October 20, is holding policy steady for now.

This article was produced with the help of IntelliNews Lambda analytical tool