More Signs Of Life In Hungary's Economy

(MENAFN- ING)

The Hungarian Central Statistical Office (HCSO) has released September data on retail sales and industrial production. As we move closer to the end of the year, it is becoming increasingly clear that both sectors are set to contribute positively to economic growth, in line with our expectations. Industrial production maintained its recent growth momentum, reaching a level not seen in two and a half years. Retail sales also rebounded after August's negative surprise, despite elevated fuel prices. Strong consumer confidence and rising real disposable incomes are expected to keep consumption on an upward trend in the coming months.

New capacities are pulling up Hungarian industrial production

8.2%	Industrial production (YoY, wda) ING estimate: 5.7% / Previous: 8.8%

Hungarian industrial performance delivered a significant positive surprise in September. Based on the pattern observed in recent months, a monthly decline had been expected. Instead, industrial production volumes increased by 0.9% month-on-month in the ninth month of the year. Owing to last year's low base, the working-day-adjusted year-on-year index jumped to 8.2%. The positive momentum continued for a third consecutive month, suggesting that the previous sawtooth pattern may finally have been broken. As a result, the fixed-base index relative to the 2021 average moved into positive territory in September for the first time in more than two years, in line with our earlier calls. After more than three years of decline and recession, this marks an important milestone in the industrial recovery.

Volume of industrial production Source: HCSO, ING

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As this is a preliminary data release, HCSO has not yet disclosed many details. Based on its brief commentary, the now-familiar pattern of concentrated growth remains in place. With new automotive production capacities coming online, vehicle manufacturing performed exceptionally well, as did the manufacture of computers, electronic and optical products, supported by rising electronics orders linked to the AI boom. It is also a positive development that electrical equipment manufacturing, which carries significant weight, has joined the group of positive contributors. By contrast, the HCSO recorded a decline in the manufacture of food products, beverages and tobacco products, which may be related to the negative performance of agriculture this year.

Looking ahead, the soft indicators also point to the continuation of the improving trend. The business confidence index remains on an upward trajectory, with October data showing a further increase despite higher energy prices. This reinforces the narrative that, notwithstanding geopolitical risks, the years of stagnation may now be firmly behind us. Developments in order books also suggest that the ramp-up of new manufacturing capacities will continue to provide meaningful momentum for industry, although growth may remain concentrated in a limited number of segments.

Performance of Hungarian industry Source: HCSO, ING

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Turning to the risks: On the upside, the better-than-expected resilience of the European economy, particularly the recovery in German industry, could translate into stronger external demand than currently anticipated. On the downside, oil prices around $100 per barrel, elevated gas prices and supply-chain disruptions stemming from geopolitical flare-ups in the Strait of Hormuz and the Red Sea remain key risks.

In the first nine months of the year, industrial output has already increased by 4.0%, suggesting that ING Bank's full-year forecast of around 3-4% may need an upward revision. The positive surprise could also lay the foundations for stable growth in the coming years, as the industrial turnaround no longer seems to be in question. The next major test will be whether growth can spread from a few isolated pockets to the sector as a whole.

Hungarian shopping trolleys are filling up again

4.3%	Volume of retail sales (YoY, wda) ING estimate: 3.6% / Previous: 2.4%

After the unpleasant surprise in August, Hungarian retail sales moved higher in September. Sales volumes rose by 1.1% compared with the previous month, pushing the calendar-adjusted year-on-year growth rate sharply higher to 4.3%. Some correction had been expected following the weak performance of the previous month, but its magnitude surpassed even the most optimistic expectations.

Retail sales volume in detail (2021 = 100%) Source: HCSO, ING

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Looking at the longer-term trend, retail sales volumes in the ninth month of 2026 were 7.7% above the monthly average recorded in 2021. This marks the strongest performance by Hungarian retail since the summer of 2022 and, despite monthly fluctuations, the underlying trend remains upward.

Turning to the details of September's outstanding performance, perhaps the biggest surprise was the marked increase in fuel sales. Sales rose by almost 2% on a monthly basis, which is certainly surprising given the continued sharp increase in fuel prices.

Sales at grocery stores contracted on a monthly basis, albeit only marginally. By contrast, sales volumes at non-food retailers increased significantly. Pharmaceutical sales jumped sharply, while computer shops, furniture and electrical goods stores, and manufactured goods in non-specialised shops also had a strong month. While in-store sales posted meaningful growth across almost every segment, mail-order and online retail performed more modestly this time. For now, it is difficult to identify a clear fundamental explanation for the broad-based strengthening in September. It may therefore partly reflect a correction following August's weakness, potentially combined with some purchases that had been postponed during the unusually hot summer months.

Breakdown of retail sales (% YoY, wda) Source: HCSO, ING

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Looking ahead, the foundations for continued growth in retail sales, and consequently in household consumption, remain favourable. Consumer confidence remains high by historical standards despite a recent correction, while relatively moderate inflation and strong nominal wage growth continue to support households' purchasing power.

We therefore expect retail sales to remain on an upward trend over the remainder of the year, albeit with considerable month-to-month volatility. For 2026 as a whole, we continue to expect growth of around 4–5%. Moreover, next year's planned economic policy measures are specifically aimed at supporting lower-income households, which typically have a higher propensity to consume. This could provide an additional boost to retail activity and household consumption.

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