Resurgent inflation, a declining birth rate and a marked dip in consumer confidence have put a dent in the re-election expectations of Hungary’s Prime Minister Viktor Orbán and his Fidesz party. Previously, Orbán and his party had been banking on a strong economy to assure them a further election win in 2026.
Some of the latest polls indicate that the centre-right Tisza party has overtaken Fidesz, leading Capital Economics Emerging Europe analyst Nicholas Farr to suggest there is a “real prospect” that Orbán could lose an election for the first time since coming to power in 2010.
Last week’s warning by the country’s central bank of heightened inflation risks was the latest setback for Orbán and his government, with Hungary’s export-dependent economy currently also at risk from the threat of U.S. tariffs.
Prices have become a major household concern since Hungary experienced the worst inflationary surge of all European Union members after Russia’s invasion of Ukraine in 2022. According to Balazs Szent-Ivanyi, a political economist and specialist on central Europe, Hungarians “have not seen such a decline in living standards since Fidesz came to power.” High levels of inflation in 2022 and 2023, he noted, had left many “seeing declines in their real incomes.” Last month, an EU survey showed Hungarian households to be more pessimistic about their economic prospects than a year previously. The insurance concern Generali estimates that some 40% of Hungarians expect their financial situation to deteriorate.
Of 12 economists surveyed in a January poll by Reuters, none envisaged Hungary’s economy attaining the 3.4% growth rate called for in Orbán’s budget for this year. One, Erste Bank, sees growth at 2%, whereas the European Commission foresees a 1.8% growth.
Ahead of his overwhelming victory in the 2022 election, Orbán launched a $5.35 billion spending spree, since reckoned to have spurred inflation. Now, with the forint approaching two-year-lows to the euro and the deficit above EU standards, a similar spending surge could risk a market backlash. Despite this, Orbán is bent on achieving an economic boost with subsidies for home purchases and renovations, increased tax benefits for families, a capital injection for small businesses plus wage and pension increases. Moreover, he is set to raise family benefits in the second half of this year and further in 2026 in a bid to redress what is Hungary’s lowest birth rate in more than a decade.
Eurasia Group Europe Managing Director Mujtaba Rahman believes Orbán is likely to pull out the stops towards the end of the year to boost the economy and his standing in order to persuade “his core voters things will get better.” In his view, as the year ends, budget demands and the “desire for election giveaways” could lead “to a weakening of the forint which will then feed through to price rises in imported goods.”
With credit rating agencies having warned that they could downgrade Hungary should state finances deteriorate beyond expectations, Orban appears to have hopes Hungarians will start to feel better about their prospects as the election approaches even though his government appears to have pushed back expectations for a stronger economic rebound to the second half of this year.
