Hungary loses billions in EU funds as Orbán’s economy faces its toughest period in years, with growth near stagnation and billions frozen due to rule of law concerns.
Record Low Corruption Ranking
A key factor weakening Hungary’s economy is the persistent crisis of trust in state institutions. The latest Transparency International Corruption Perceptions Index for 2025 shows Hungary scored only 40 points and ranked 84th worldwide. This is the country’s worst result in history and simultaneously the lowest in the entire European Union – tied with Bulgaria.
Over the past thirteen years, Hungary has recorded the largest point drop among all EU member states. The organization indicates the problem is systemic and concerns public procurement, where large contracts often go to entities linked to political elites. Analyses also highlight mechanisms for transferring public funds through foundations linked to the National Bank of Hungary, where – according to estimates – hundreds of billions of forints may have flowed outside the transparent control system.
Loss of EU Funds
The consequences are direct and tangible. Hungary has permanently lost another billion euros in EU funds, while payments of approximately 20 billion euros remain frozen under the conditionality mechanism linked to the rule of law. The European Commission decided to suspend part of the cohesion funds as early as 2022, citing risks related to corruption and lack of effective mechanisms for controlling public expenditure. In subsequent years, part of the funds remains unavailable, limiting infrastructure investments and regional development.
Economic Growth and Regional Comparison
At the same time, other regional countries are improving their positions. Estonia, the Czech Republic, and Slovenia are systematically strengthening institutional transparency, attracting investors and increasing economic growth rates. Hungary, however, is increasingly falling behind Western European standards.
Institutional problems are reflected in economic results. According to data from the Hungarian Central Statistical Office, the country’s economy grew by only 0.3% in 2025, with growth of just 0.2% in the last quarter. This level is close to stagnation and significantly below earlier government forecasts, which assumed growth dynamics in the 2.5-3% range.
Inflation vs. Economic Growth
Even more concerning is the relationship between economic growth and inflation. Since 2019, prices in Hungary have risen by 46%, while real GDP has increased by only about 5%. This represents a real decline in household purchasing power and worsening living standards for citizens. Hungary simultaneously experienced one of the highest inflation rates in the European Union – in 2023, it exceeded 25%, according to Eurostat data.
Investment Decline
One of the most important factors in stagnation is the sharp drop in investments, which, according to economic institute analyses, amounted to 20-25%. Hungary’s economy is heavily dependent on the automotive industry, including German corporations such as Audi, Mercedes-Benz, and BMW, which have established their production facilities in the country.
The slowdown in the global car market, especially in the electric vehicle segment, has limited the utilization of new production capacities. Meanwhile, the decline in demand in Germany – Hungary’s main trading partner – directly translated into lower industrial production.
According to Eurostat data, industrial production in Hungary fell by over 5% in 2024, one of the worst results in the EU. Analysts indicate that a recovery in the automotive sector may not occur until the second half of 2026, provided the economic situation in Western Europe improves.
Public Debt Servicing
Particularly serious for the budget are rising public debt servicing costs. In 2025, interest expenses exceeded 4 trillion forints, or approximately 10.5 billion euros. This amount is about 0.6 trillion forints higher than the previous year and nearly four times higher than seven years earlier.
One reason is the debt structure, including inflation-indexed retail bonds. During the period of high inflation, the state had to pay investors very high interest rates. Currently, another problem has emerged – refinancing old debt at significantly higher interest rates.
Bonds issued several years ago had interest rates of 1.5-3.3%. Currently, new issuances require yields exceeding 6%. This means up to a threefold increase in the cost of servicing the same debt.
Currency Instability
Economic uncertainty also affects the currency situation. The forint exchange rate remains unstable, with forecasts indicating a wide range of possible fluctuations – from 365 to even 420 forints per euro. A weak currency increases import costs, fuels inflation, and complicates business planning.
The National Bank of Hungary is forced to maintain relatively high interest rates to protect the currency’s value and limit inflation. At the same time, high interest rates restrict access to credit and hinder private investment.
Upcoming Elections and Fiscal Risks
An additional risk factor is the upcoming 2026 parliamentary elections. In such periods, governments often increase public spending, which can lead to further deficit growth and currency weakening. Economists point out that fiscal consolidation will be necessary after the elections – that is, spending cuts and attempts to stabilize public finances.
Overall Economic Challenges
Hungary’s current economic situation is under strong pressure from multiple factors simultaneously: limited access to EU funds, economic stagnation, high debt, and currency instability. The combination of these elements means the country faces one of its greatest economic challenges since the systemic transformation.
