HUNGARY
Macro Newsletter A u g u s t
2 0 2 6
Domestic News
D O M E S T I C
N E W S
Economic Momentum Strengthens as Inflation and Interest Rates Decline •
•
Hungary’s economic recovery gained momentum in the first half of 2026, with GDP expanding by 1.7% year-on-year, representing the strongest growth rate since late 2022 and a marked improvement compared with the previous quarter. The acceleration was primarily driven by the services sector, while industrial activity also returned to growth. Despite continued weakness in the external environment, the Hungarian economy is expected to maintain this positive trajectory, with annual GDP growth forecast at approximately 1.6–1.8% in 2026. Inflationary pressures eased considerably during the period. Annual inflation fell to 1.2% in July 2026, down from 1.7% in June and reaching its lowest level since November 2016. The decline was mainly attributable to lower food and household energy
prices, while price increases also moderated across several other consumer categories, including alcoholic beverages, tobacco, clothing, consumer durables and fuels. Core inflation remained subdued, standing at 1.9% in July. •
Against the backdrop of a stronger forint and moderating inflation, the National Bank of Hungary adopted a more accommodative monetary stance, cutting its policy rate to 5.5% in August. The lower interest-rate environment is expected to provide additional support to economic activity. Meanwhile, labour market conditions remained broadly stable, with the unemployment rate unchanged at 4.5% in the April–June period, underlining the continued resilience of the labour market despite the gradual pace of the broader economic recovery.
Base rate evolution in Hungary, % 14 12 10 8 6 4 2 0
Source: MNB
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Domestic News
D O M E S T I C
N E W S
Industrial Rebound and Improving Financial Confidence •
•
Hungary’s industrial sector recorded a strong rebound in June 2026, with production increasing by 10.1% year-on-year, the fastest rate of growth since September 2022 and a significant turnaround from the 0.4% decline recorded in May. The recovery was driven primarily by manufacturing, which accounts for approximately 96% of total industrial output and expanded by 10.8% after stagnating in the previous month. Retail activity also remained in positive territory, although growth moderated during the month. Retail sales increased by 3.0% year-on-year in June, compared with 4.8% in May, representing the slowest expansion since November 2025. The weaker performance was mainly linked to declining sales across several non-food categories, including furniture and
electrical goods, pharmaceutical and medical products, cosmetics, textiles, clothing and footwear, as well as mail-order and online retail. •
At the same time, Hungary’s financial markets showed increasing stability despite the continued geopolitical uncertainty. By the end of August, the forint was trading at around HUF 360/EUR, supported by improved post-election stability and still relatively attractive interest rates. Meanwhile, the 10-year government bond yield declined to approximately 5.5%, more than 150 basis points below its level a year earlier, pointing to strengthening investor confidence and an improvement in overall market sentiment.
EUR/HUF ex. rate (2021-2026) 440 420 400 380 360 340 320
Source: MNB
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Energy Market Energy Markets Remain Volatile Amid Middle East Supply Risks
E N E R G Y
M A R K E T
EU DUTCH TTF Gas Price (EUR/MWh) 65
60 55 50 40 35 30 25
2026.08.25
2026.07.25
2026.06.25
2026.05.25
2026.04.25
2026.03.25
2026.02.25
2026.01.25
2025.12.25
2025.11.25
2025.10.25
2025.09.25
2025.08.25
2025.07.25
2025.06.25
2025.05.25
2025.04.25
2025.03.25
2025.02.25
2025.01.25
2024.12.25
2024.11.25
20
2024.10.25
Signs of progress in regional negotiations have provided some reassurance. Iran’s and Oman’s foreign ministers discussed plans for a temporary transit corridor through the Strait of Hormuz, alongside efforts to clear mines from the waterway, while Pakistan reported progress in talks with Tehran aimed at ending the conflict. The US decision to return diplomats to the region has also contributed to improving sentiment. Nevertheless, significant supply risks persist as the ongoing maritime blockade continues to disrupt physical LNG flows from the Persian Gulf, with shipments from Qatar facing severe delays. At the same time, persistent hot weather across Europe is increasing electricity demand for cooling and slowing the seasonal replenishment of gas storage facilities, adding further pressure to an already volatile energy market.
45
2024.09.25
•
Renewed geopolitical tensions in the Middle East have heightened concerns over global energy security, pushing European natural gas prices above €64/MWh and Brent crude oil close to USD 86 per barrel by the end of August. Although recent developments in diplomatic negotiations have helped to ease fears of a further escalation, energy markets remain highly sensitive to potential supply disruptions.
2024.08.25
•
Source: Trading economics
Brent oil price (USD/Bbl) 115
105 95 85 75 65
2026.08.26
2026.07.26
2026.06.26
2026.05.26
2026.04.26
2026.03.26
2026.02.26
2026.01.26
2025.12.26
2025.11.26
2025.10.26
2025.09.26
2025.08.26
2025.07.26
2025.06.26
2025.05.26
2025.04.26
2025.03.26
2025.02.26
2025.01.26
2024.12.26
2024.11.26
2024.10.26
2024.09.26
2024.08.26
55
Source: Trading economics
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Eurozone
E U R O Z O N E
Eurozone Inflation Pressures Persist as Growth Signals Remain Fragile •
•
The European Central Bank kept its key interest rates unchanged at its July meeting, following a 25-basis-point increase in June—the first rate hike in three years— prompted by rising energy prices and persistent inflationary pressures. Since then, policymakers have adopted a more cautious, wait-and-see approach, as softer inflation dynamics, moderating wage growth, weaker economic activity and easing inflation expectations have reduced the immediate need for further monetary tightening.
Eurozone annual inflation nevertheless continued to edge higher, reaching 2.9% in July 2026, up from 2.8% in June and remaining well above the ECB’s 2.0% target. The increase was largely driven by a renewed surge in energy prices, with energy inflation accelerating to 10.3%,
compared with 8.5% in the previous month, amid renewed hostilities between the US and Iran.
•
Meanwhile, Germany’s industrial sector showed further, albeit modest, signs of recovery. Industrial production increased by 0.2% month-on-month in June, marking the third consecutive monthly expansion, although growth slowed from 0.7% in May. The improvement was supported primarily by strong growth in automotive production and other transport equipment, partly offset by a decline in machinery and equipment output. On an annual basis, however, German industrial production remained slightly below the previous year’s level, declining by 0.1%, underlining the continued fragility of the broader industrial recovery.
Eurozone main refinancing operations rate, %
EUR/USD ex. rate
5
1,2 1,19 1,18 1,17 1,16 1,15 1,14 1,13 1,12
4
3 2
Source: Trading Economics
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0 05.2017 09.2017 01.2018 05.2018 09.2018 01.2019 05.2019 09.2019 01.2020 05.2020 09.2020 01.2021 05.2021 09.2021 01.2022 05.2022 09.2022 01.2023 05.2023 09.2023 01.2024 05.2024 09.2024 01.2025 05.2025 09.2025 01. 2026 05.2026
16 Jul 2025 23 Jul 2025 31 Jul 2025 08.aug.25 17.aug.25 24.aug.25 Sep 01, 2025 Sep 09, 2025 Sep 17, 2025 Sep 24, 2025 Oct 02, 2025 Oct 10, 2025 Oct 19, 2025 Oct 27, 2025 04.nov.25 12.nov.25 20.nov.25 28.nov.25 08.dec.25 16.dec.25 24.dec.25 01.jan.26 09.jan.26 19.jan.26 26.jan.26 03.febr.26 11.febr.26 19.febr.26 02.márc.26 10.márc.26 18.márc.26 26.márc.26 03.ápr.26 13.ápr.26 20.ápr.26 27.ápr.26 05.máj.26 13.máj.26 20.máj.26 27.máj.26 04.jún.26 12.jún.26 30.jún.26 08.júl.26 16.júl.26 24.júl.26 03.aug.26 11.aug.26 19.aug.26
1
Source: ECB
5
USA
M A C R O
U S A
Easing USA Inflation Supports Financial Market Stability •
Inflationary pressures in the United States continued to moderate in July 2026, with the annual inflation rate declining for the second consecutive month to 3.4%, down from 3.5% in June and further below the 4.2% peak recorded in May 2023. The slowdown was largely supported by the easing impact of the earlier energy shock triggered by the conflict with Iran.
•
At the same time, the US labour market remained broadly resilient. The unemployment rate declined to 4.1% in July from 4.2% in the previous month, falling below market expectations, although the decrease was partly attributable to a reduction in labour force participation.
US 10 year Bond evolution, %
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•
Financial market conditions also benefited from easing inflation concerns. The yield on the 10-year US Treasury note stood at around 4.64% on 26 August, following a decline of nearly 10 basis points, as lower oil prices reduced concerns over near-term inflationary pressures. Investors also continued to assess the potential impact of the US Treasury Department’s expanded debt buyback programme, contributing to continued volatility in the bond market.
Source: Trading Economics
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Forecast Hungary
M A C R O
Economic indicators
2022
2023
2024
2025
2026*
Real GDP growth (%)
4.6
-0.9
0.6
0.5
1.6
Industrial output growth (%)
5.8
-5.5
-4.0
-3.2
2.0
Investments (%)
0.3
-10.2
-13.8
-4.3
2.3
Inflation (%)
14.5
17.6
3.7
4.4
1.8
Gross wages (%)
17.6
14.0
13.2
8.8
9
General government balance (% of GDP)
-6.2
-7.0
-5.1
-4.7
-7.5
Public debt (% of GDP)
74.1
73.3
73.5
74.6
77.5
Unemployment rate (%)
3.6
4.2
4.3
4.4
4.6
Base rate (end of year), %
13
10.75
6.5
6.5
5.25
10 year bond yield (end of year) (%)
8.98
5.93
6.5
6.87
5.5
F O R E C A S T
Source: Colliers
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