An important factor is the consequences of the Russian war in Ukraine. The proximity of the conflict creates political and economic uncertainties that reduce investment willingness and disrupt trade. Hungary is heavily dependent on both the export and import of goods from this region. The ongoing instability has a direct impact on economic activity.
Additionally, the weak economic situation in Germany plays a role. Germany is one of Hungary's main trading partners, and the decreased demand for Hungarian products hampers exports. The slowing German economy has led to a decline in industrial production and export volumes, causing a negative spiral in the Hungarian economy.
Although the Hungarian Minister of Finance remains optimistic about long-term prospects, current economic performance is affected by insufficient structural reform and inefficiency within the Hungarian government. These internal problems are exacerbated by a tight labor market and rising inflation, which reduce consumers' purchasing power and temper domestic demand.
The ongoing economic stagnation could have significant consequences for Hungarian society and its position in the region. Limited growth hinders the government's ability to invest in crucial infrastructure and social projects. This may lead to a lower quality of life and increasing dissatisfaction among the population in the long term.
Furthermore, the declining economic growth could lead to higher unemployment. Although it remains low at present, a sustained economic downturn could force companies to lay off staff, increasing unemployment and worsening social tensions.
The sluggish economic growth may also affect political stability. Public dissatisfaction with economic performance could lead to political unrest and pressure on the Hungarian government to act more quickly and effectively.
Compared to its neighboring countries, the Hungarian economy performs worse. Poland and the Czech Republic, for example, have shown more resilient economic growth despite similar external challenges. This can partly be attributed to more effective government policies and a more diversified economic structure that is less dependent on external trade partners such as Germany.