Hungary's annual economic growth is expected to be “close to zero” in Q3, according to Economy Minister Marton Nagy, signalling a deeper downturn than previously anticipated.

Nagy cautioned at a conference the Portfolio news website organised that the upcoming data, set to be released on 30th October, will likely fall short of market expectations. 

This contrasts with the average estimate from a Bloomberg survey, which projected a 1.8% growth for the July-September period.

The latest forecast raises concerns about a potential renewed recession following a quarterly contraction in the previous three months. Nagy attributed the economic challenges to stagnation in Germany, Hungary's largest export market, Bloomberg reports.

Prime Minister Viktor Orban is striving to revitalise the economy ahead of the 2026 elections, as the ruling party and the main opposition are closely matched in recent polls. 

Meanwhile, the European Union is still withholding approximately €20 billion in funding designated for Hungary due to issues related to rule-of-law concerns.

Furthermore, earlier this week, the cabinet approved a 21-step economic program designed to stimulate the economy, with a particular focus on the housing sector. 

Among the initiatives is a plan that would permit Hungarians to access their private pension funds for property purchases and renovations without incurring tax penalties.

During the conference where Nagy spoke, there were clear signs of frustration regarding Orban’s economic policies. The cabinet has a history of failing to meet economic growth targets, exceeding budget deficit goals, and addressing shortfalls through various corporate levies.

Sandor Csanyi, the head of OTP Bank Nyrt., Hungary's largest lender and one of the biggest banks in Central and Eastern Europe, criticised the additional charges imposed on the banking sector as “unfair” and attributed the economic management issues to the government's shortcomings.

He stated that the government reneged on its promise to phase out the extraordinary bank levy, and the decision to increase the transaction tax has particularly disadvantaged local lenders compared to digital banks like Revolut, which are not subject to the same tax burdens.