Q2 GDP falls mildly short of analyst forecasts but it should not create pressure on government and MNB policy

HUNGARY - In Brief 30 Jul 2026 by Istvan Racz
Preliminary data for GDP growth in Q2 has been reported at 0.4% qoq, 1.6% yoy, following 0.8% qoq, 1.7% yoy in Q1. So, GDP grew by 1.7% yoy in H1 this year.This actual falls short of the average analyst expectation of 0.7% qoq, but the shortfall is not particularly big. The key thing is that the economy remains on a track of moderate growth, still heading towards the 2%-ish expectation for this year, widely shared by various forecasters. Most importantly, the Finance Ministry expects 1.6-2% growth for 2026, which continues to look entirely realistic.As a result, we do not think that the new GDP data will create extra pressure on the government to scale back any of its prospective (currently largely unknown) fiscal adjustment plans for the 2026-2027 period, the same way as the MNB should not feel pressured to go for a weaker forint on this basis.By the way, the government and the public audience is currently preoccupied with the immediate prospect of a one-week period of super heat, with 38-40 degrees Celsius daily peaks, not paying too much attention to the GDP data. The country's only nuclear power station at Paks will have to be probably switched off later today or tomorrow, in part because there is only little water in the Danube river, which is used to cool down the power plant, but mainly because that water is getting excessively hot. So, for the next few days, the country's net electricity imports will have to be raised. The good news is that: (a) the share of imports out of total electricity consumption is relatively low (19% in 2025); (b) Hungary is part of the unified European electricity grid, so there should be no serious supply constraint; (c) against the r...

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