Hungary’s second-quarter growth supported by consumption and exports
The desk views Hungary's positive second-quarter growth, driven by strong consumption and exports, as a bullish signal for the HUF. Per the full note source, retail sales showed robust activity, while industrial output rose 5.4% YoY, well above ING's optimistic estimate of 3.0%. This growth trajectory suggests a gradual economic recovery, aligning with consensus views estimating further strength in the upcoming quarters. With no immediate high-impact events on the horizon, traders should focus on underlying economic indicators for potential trading opportunities.
What the desk is arguing
The desk frames Hungary's economic surprise as indicative of a potential strengthening HUF. Given the upward momentum in retail sales and industrial production exceeding expectations, the outlook for GDP growth appears optimistic, particularly as exports sustain their momentum.
Retail sales continue to rise due to increasing consumer confidence and real disposable income. The industrial sector's robust production growth of 5.4% YoY significantly overshot expectations, hinting at sustained momentum into the next quarters.
Where it sits in our coverage
The desk's assessment suggests a more bullish outlook for the HUF compared to the bofa prediction, which sits at the lower bound of our consensus range. This positions the desk's view towards the upper half of the expected consolidation range.
How other firms see it
Most aligned firms, including jpmorgan, share a similar optimistic sentiment regarding Hungary's economic recovery, although some firms, such as bofa, maintain a more cautious outlook. The divergence in expectations illustrates varying assessments of Hungary's long-term sustainable growth potential amid external economic pressures.
Looking ahead, movements in the EUR/HUF pair will closely reflect Hungary's economic performance, especially as central banks in the region assess inflation dynamics. Market participants should also watch closely how these trends might influence ECB policy decisions moving forward.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Hungary's GDP growth is being fueled by strong consumption and exports.
- 02Industrial production rose significantly, exceeding expectations with a 5.4% YoY increase.
- 03Retail sales reflect increased consumer confidence and disposable income.
- 04Trading opportunities may arise from underlying economic signals without immediate high-impact events.
Market implications
Traders should monitor the EUR/HUF's performance as a key indicator of the HUF's strength following the recent economic data. Key levels to watch include the psychological resistance at 1.10, while fluctuations around 1.04 may provide buy opportunities if growth momentum continues.
Risks to this view
A reversal in HUF strength could occur if upcoming economic data reveals a slowdown in consumer spending or if external factors disrupt export activity. Global economic uncertainties or a downturn in the European market could significantly impact Hungary's growth trajectory.
Articles Hungary’s second-quarter growth supported by consumption and exports 12:16 Hungary Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Hungary’s May activity data brought further positive surprises. Retail sales remained robust, while industrial output exceeded expectations. Based on the data already available, GDP growth in the second quarter will be driven by consumption and export activity Peter Virovacz The Hungarian industry has managed to maintain an upward trend The Hungarian Central Statistical Office (HCSO) has released data for May on retail sales and industrial production.
Despite the monthly fluctuations, industry has managed to maintain an upward trend. Retail sales are still fuelled by elevated consumer confidence and rising real disposable income. Against this backdrop, we may be pleasantly surprised by second-quarter GDP growth. 5.4% Industrial production (YoY, wda) ING estimate: 3.0% / Previous: 0.9% Industry is clawing its way up amid a sawtooth pattern Following the correction in April, the Hungarian industry has continued to show an upward trend, which has been in place since the end of 2025.
In May, production increased by 2.3% month-on-month, which was a clear positive surprise as it exceeded our estimate, which was the most optimistic on the market. The seasonally adjusted year-on-year print also increased significantly, reaching 5.4%. However, the unadjusted index showed a decline of 0.4%, largely due to fewer working days compared to last year.
Volume of industrial production Source: HCSO, ING "> Source: HCSO, ING It appears that the sawtooth pattern has returned this year, meaning that stronger months are consistently followed by weaker ones. However, compared to previous similar trends, a refreshing change is that this time it is all occurring along an upward trend line, meaning industrial output has finally been expanding. This is also indicated by the fact that the sector’s production volume is now only 2.6% below the 2021 average.
This corresponds to the performance seen in early 2024, meaning we are essentially talking about a two-year high in production volumes. As this is preliminary data, the HCSO has not yet disclosed many details. However, based on its brief commentary, it seems that for now, 'two swallows do make a summer'.
In fact, production volume declined on a yearly basis in most manufacturing subsectors in May. At the same time, production expanded in two key sectors: electronics and automotive manufacturing. In our view, this may indicate that the large electronics manufacturer in Komárom-Esztergom County and the new automotive production capacities in Hajdú-Bihar County are driving Hungarian industry upwards overall.
This development was foreshadowed to some extent by a survey published at the end of April, which indicated that the seasonally adjusted capacity utilisation rate among manufacturers rose to 76.9% in the second quarter – a level not seen since early 2023. The manufacturing PMI has been consistently above 50 for several months, indicating expansion, and this finally appears to correlate with actual industrial trends. Performance of Hungarian industry Source: HCSO, ING "> Source: HCSO, ING While the surge in new export capacity could substantially improve the industrial outlook, the current data does not yet suggest that the recovery is broad-based.
Nevertheless, it is possible that the fixed-base index could reach – or even substantially exceed – the monthly average for 2021 before the end of this year. Consequently, Hungarian industry's full-year performance could achieve an average growth rate of around 4% in 2026. In other words, after three years of industrial recession, the sector could once again contribute positively to the overall performance of the Hungarian economy.
These positive prospects are also fuelled by the fact that the most serious supply risks surrounding the Strait of Hormuz appear to have eased, although it may take some time for shipping traffic to return to normal. 4.8% Volume of retail sales (YoY, wda) ING estimate: 5.3% / Previous: 3.6% Retail sales are growing across a wide range of segments Hungarian retail sales data for May largely met market expectations. Sales volume increased by 0.7% MoM, resulting in a 4.8% YoY rise in the index, adjusted for calendar effects. Examining the longer-term trend, retail sales volume in May 2026 exceeded the monthly average for 2021 by 6.8%.
It is now almost certain that the March figure was a one-off spike, that April merely represented a correction towards the sustained trend, and that May once again saw growth in line with this trend. Retail sales volume in detail (2021 = 100%) Source: HCSO, ING "> Source: HCSO, ING Looking in more detail, sales at grocery stores moderated in May compared to April, following the Easter surge. Therefore, the strong overall retail performance is more attributable to non-food stores.
In this segment, monthly sales growth amounted to 2.3%. This is considered an exceptional figure, as the last time the Statistical Office recorded more dynamic monthly growth was in April last year. Sales of mail-order and online goods surged significantly.
This may partly be due to a base effect, given that the previous month was weak. However, it cannot be ruled out that changes to EU customs regulations, which took effect in July 2026, also played a role in bringing forward certain purchases. Sales at stores selling cosmetics continued to grow, possibly in anticipation of summer.
However, the standout performance came from the textiles, clothing, footwear segment, which posted an 8.1% MoM increase. This may have been influenced by a significant wave of clearance sales prior to the closure of a well-known sports retailer, as well as the low base caused by extremely weak sales in April. Overall, significant volatility continues to characterise individual retail subsectors, but growth is fundamentally broad-based – in contrast to industry.
Fuel sales volume plummeted by 4.4% compared to the previous month but remain extremely high. Breakdown of retail sales (% YoY, wda) Source: HCSO, ING "> Source: HCSO, ING Looking ahead, consumer confidence is flirting with historical highs; persistently low inflation and strong wage growth collectively provide a favourable foundation for sustained growth in the retail sector and consequently in consumption. Taking the year as a whole, we therefore anticipate a growth in retail sales of around 5–6%, leading us to conclude that consumption will remain the main driver of the Hungarian economy in 2026 as well.
Retail sales Manufacturing Industry Hungary GDP Consumption Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Author Peter Virovacz Chief Economist, Hungary Peter Virovacz is a Chief Economist in Hungary, joining ING in 2016.
Prior to that, he has worked at Szazadveg Economic Research Institute and the Fiscal Council of Hungary. Peter studied at the… In this article Industry is clawing its way up amid a sawtooth pattern Retail sales are growing across a wide range of segments
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