Hungary Country Profile 2026: Economy, Investment, Labour Outlook for Foreign Investors

Valians

Table of Contents

Introduction

Hungary sits at the center of Central Europe, offering EU membership, strong logistics links, and a highly industrialized structure shaped by automotive, electronics, machinery, and chemicals. The Hungary economy is now entering a new phase. After several challenging years marked by inflation, global shocks, and domestic policy adjustments, conditions are stabilizing. Inflation is easing. Investment is gradually returning. And global companies are reassessing their European footprint as supply-chain resilience becomes essential. 

As a result, interest in foreign direct investment in Hungary is rising again. The strongest demand comes from manufacturing and technology players seeking a competitive and strategically located base in Europe. 

In this article, we – Valians International, provide a clear and structured overview of the economy, covering labour, finance, investment conditions, and forecasts for 2026 – 2028. This guide helps international businesses assess whether they should invest in this country in the years ahead.

Country & Economic Overview

Hungary covers 93,000 km² and has 9.6 million inhabitants. Budapest is the capital and the main economic hub. The country joined the European Union in 2004, and today it enjoys full access to the Single Market. It uses the Hungarian forint (HUF), not the euro, which creates both flexibility and volatility. 

According to the European Commission’s Autumn 2024 Forecast and FocusEconomics, the country economy is moving from volatility to gradual stabilization. In 2024, Hungary’s GDP reached USD 223 billion, with GDP per capita at around USD 22,000. The economy contracted by –0.7% in 2023, but it recovered to about 2.3% growth in 2024. Looking ahead, forecasts show GDP rising to ~3.1% in 2025 and remaining in the 2.5 – 3.0% range in 2026 (European Commission, 2024; FocusEconomics, 2024). These figures confirm a moderate but steady recovery. 

Inflation has been the biggest challenge. As noted by the Hungarian Central Bank (MNB) and the European Commission, inflation surged to 24 – 25% in 2023, the highest level in the European Union. However, it eased to about 6.2% by late 2024, and it is expected to fall further to 4.1% in 2025 and around 3.3% in 2026 (MNB Monetary Report 2024; European Commission 2024). This downward trend supports stronger stability in the coming years.

The European Commission’s latest outlook shows that the Hungary economy is expected to grow steadily from 2025 to 2027, with inflation falling toward target and public finances gradually stabilizing.
The European Commission’s latest outlook shows that the economy is expected to grow steadily from 2025 to 2027, with inflation falling toward target and public finances gradually stabilizing.

Overall, insights from the EU Commission, OECD, and FocusEconomics suggest that the economy of Hungary will continue to improve through 2026. Lower inflation, rising real wages, and the gradual return of EU funds will all help strengthen the country’s recovery. 

The verdict: The Hungary economy is stabilizing. It remains vulnerable to inflation and external shocks. Investors should monitor macro trends, yet they can rely on a more predictable climate moving forward.

Structure of the Hungary Economy & Key Growth Drivers

Hungary’s economy is highly industrialized. Manufacturing is its backbone. Exports depend heavily on automotive, electronics, machinery, chemicals, and pharmaceuticals. According to the OEC trade data, Hungary’s exports are deeply integrated in global value chains. 

Manufacturing strength

Automotive is the star sector, accounting for ~20% of industrial output. Audi, Mercedes-Benz, BMW, Suzuki, and many Tier-1 suppliers operate locally. In fact, the BMW iFactory in Debrecen (which officially opened in September 2025) is a major future growth driver. Recent investments focus on electric vehicles. Thus, battery manufacturers and EV component producers continue to expand.  

Electronics and machinery also account for major export flows. Many multinational manufacturers choose Hungary because it combines: 

  • EU access. 
  • Skilled technical workforce. 
  • Competitive labour costs. 
  • Strong supplier ecosystems. 
  • Reliable infrastructure.

Trade competitiveness

Hungary exports more than 80% of its goods to EU markets, with Germany (around 25% in 2023) as the leading partner. Italy (5.75%), Romania (5.43%), and Slovakia (4.5%) are also the main export destinations. The country’s revealed comparative advantage (RCA) is strongest in: 

  • Cars and vehicle parts. 
  • Electrical machinery. 
  • Pharmaceuticals and chemicals. 

These sectors strengthen the economy, especially during global industrial recovery.

According to OEC, Hungary’s exports in 2023 were driven by cars, electric batteries, machinery, and pharmaceuticals, with Germany remaining the largest export partner. This structure highlights the strength of the Hungary economy in manufacturing and high-value industries.
According to OEC, Hungary’s exports in 2023 were driven by cars, electric batteries, machinery, and pharmaceuticals, with Germany remaining the largest export partner. This structure highlights the strength of the Hungary economy in manufacturing and high-value industries.

EU funds and infrastructure

Hungary benefits significantly from EU structural and cohesion funds. These funds support: Transport and logistics, R&D and innovation, Digital transformation, and regional development. Some funds were suspended due to rule-of-law issues, but negotiations in 2024 – 2025 showed progress. The country is expected to regain partial access to EU financing in 2025 – 2026. 

The verdict: Hungary’s competitiveness depends on its industrial strength. Investors aligned with automotive; EV supply chains, machinery, electronics, and advanced manufacturing will find strong ecosystems and long-term value.

Investment Climate & FDI Dynamics

Foreign direct investment plays a major role in the Hungary economy. The country actively promotes itself as an FDI destination. Its 9% corporate tax rate, the lowest in the EU, is a major advantage. 

According to HIPA (The Hungarian Investment Promotion Agency) and OECD (The Organization for Economic Co-operation and Development): 

  • FDI inflows in 2023: EUR 13 billion. 
  • Expected inflows in 2024: EUR 8.4 –.9 billion. 
  • FDI stock (total) in 2024: ~USD 224 billion. 
  • FDI accounts for ~6 – 7% of GDP, one of the highest ratios in the EU. 

Hungary continues to attract strong FDI despite global uncertainty. Key investor countries include Germany, South Korea, Japan, China, United States. 

Recent investments include multibillion-dollar battery projects, new automotive lines, and expansions in electronics manufacturing. This trend supports future FDI growth. 

The government offers incentives in: High-value manufacturing; R&D and technology; Export-driven sectors; Logistics and distribution. Also, the support may include: 

  • Tax allowances 
  • Cash grants 
  • Job creation subsidies 
  • Training support 

This makes the country appealing for companies planning to invest in Hungary in advanced manufacturing or technology. 

Despite generous incentives, investors must also consider: 

  • Ongoing disputes with the EU 
  • Rule-of-law concerns 
  • Policy unpredictability 
  • Delayed EU funding 
  • Currency volatility 
  • Energy cost fluctuations 

These challenges do not remove Hungary’s attractiveness. Yet they require careful planning and strong local intelligence. 

The verdict: The country offers powerful incentives and strong industrial potential. However, regulatory unpredictability means investors must build risk buffers and maintain flexible expansion plans.

Hungarian Labour Market & Workforce Quality

Hungary’s labour market supports its export-oriented economy. The workforce is skilled, especially in engineering, manufacturing, and science. Education levels in technical fields are high. 

Wages in Hungary remain lower than in Western Europe but higher than in the Balkans or parts of Southeast Asia. This creates a middle ground: 

  • More expensive than emerging economies. 
  • Cheaper and more productive than many EU neighbours. 

However, Hungary faces structural issues: 

  • The population is ageing. 
  • Birth rates are low. 
  • Talent shortages appear in some regions. 
  • Younger workers often migrate to Budapest or abroad. 

Therefore, companies often rely on automation, internal training programs, international recruitment, or flexible working models to fill gaps. 

In fact, Hungary’s labour productivity has grown slowly in recent years. OECD data shows productivity increased by about 1.2% per year between 2015 and 2023.

Overall productivity remains around 30% below the EU average, but still higher than Romania, Bulgaria, and Croatia, which keeps Hungary competitive within Central Europe. 

For investors, this means labour is cost-efficient, but productivity gains will depend on automation, digital tools, and training. Companies bringing advanced processes can unlock strong long-term performance.

Financial System, Taxation & Business Environment

Hungary provides a mixed financial environment. Taxation is extremely favourable. Financing conditions are tighter and remain more expensive than in Western Europe. 

For tax system, Hungary has: 

  • 9% corporate income tax (EU’s lowest). 
  • 27% VAT (EU’s highest). 
  • Competitive incentives for R&D and investment. 

This combination makes Hungary attractive for businesses focused on high-margin manufacturing and export operations. 

For banking & finance 

  • Interest rates were elevated due to inflation. 
  • Financial conditions remain conservative. 
  • Borrowing costs are stabilizing but still higher than the EU average. 
  • Central bank base rate (MNB) at end-2023: 13% 
  • Base rate end-2024: ~7.25% 
  • Expected 2025 level: ~5.5–6% 

Though decreasing, borrowing costs remain higher than EU averages. 

Hungary’s debt-to-GDP ratio remains around 70–75%. Budget deficits are above EU thresholds. This limits fiscal flexibility and increases sensitivity to economic shocks. 

  • Fiscal deficit 2024: –4.8% of GDP 
  • Fiscal deficit 2025 forecast: –3.6% 
  • Public debt 2024: ~73.5% of GDP 
  • Debt forecast 2026: ~72% 

The verdict: Hungary offers excellent tax advantages. But higher interest rates, fiscal constraints, and a volatile currency require investors to integrate strong financial planning and hedging. 

Hungary Economic Outlook 2026 – 2027

Hungary is entering a stabilization and recovery phase. Economic forecasts for 2026 – 2027 suggest moderate but positive growth. 

Hungary’s economic forecast for 2026–2027 shows moderate GDP growth, easing inflation, and a stable recovery path supported by EU funds, EV battery investments, and the manufacturing sector.
Hungary’s economic forecast for 2026–2027 shows moderate GDP growth, easing inflation, and a stable recovery path supported by EU funds, EV battery investments, and the manufacturing sector.

Hungary offers strong opportunities across several high-growth sectors. The country is now Europe’s third-largest battery market, driven by rapid EV-related investments from global manufacturers.  

Advanced manufacturing is also expanding, with growing capabilities in semiconductors, robotics, aerospace components, and precision machinery.  

Logistics remains a strategic strength thanks to Hungary’s central location, which supports the DACH region, Central and Eastern Europe, and future Ukraine reconstruction efforts. 

Besides, digital services are rising as well. Shared service centers, engineering outsourcing, cybersecurity, and software development continue to grow, supported by a solid technical talent pool.  

Green transition is creating additional potential in solar energy, hydrogen technologies, and energy-efficient production. 

To sum up, Hungary’s strongest opportunities lie in EVs, batteries, advanced manufacturing, logistics, and digital services. These sectors are set for continued growth, making them attractive entry points for foreign investors. 

However, investors should also consider several risks. Inflation remains sensitive. Policy changes can be sudden. EU fund delays still occur. The forint is volatile. Labour shortages are rising, and high energy costs affect manufacturing. Hungary is also closely tied to Germany’s industrial cycle, which influences export performance. 

Hungary is a strategic investment location, but not risk-free. Companies should prepare strong risk-management plans and stay flexible to adapt to policy or market changes. 

Final Thoughts

The Hungary economy in 2026 – 2027 offers both opportunity and complexity.

Hungary is not the EU’s fastest-growing economy. Yet it remains one of the most strategically positioned and cost-efficient locations for companies seeking manufacturing capacity, distribution advantages, and long-term presence in Europe. 

Those who plan to invest in Hungary should: 

  1. Choose sectors aligned with Hungary’s strengths. 

  2. Plan for inflation, FX risk, and higher borrowing costs. 

  3. Evaluate labour availability early. 

  4. Monitor EU regulatory developments. 

  5. Build long-term, resilient operational strategies. 

Entering a new market requires more than data, it requires on-the-ground expertise, validated insights, and trusted partners. Valians International helps foreign companies navigate Central and Eastern Europe with confidence. 

If you are exploring opportunities or planning to invest in Hungary, our team is ready to help you move forward with clarity and precision. Contact Valians International to discuss your project: contact@valians-international.com now!

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