The joint intervention by the United States and Israel against Iran triggered the most severe energy-supply shock in decades, pushing the price of Brent crude above 110 dollars per barrel and that of European gas above 60 €/MWh. Although prices have partially eased following President Trump's announcement of a possible end to the conflict, a rapid diplomatic solution appears unlikely and global markets remain highly volatile. Even in the event of a relatively swift conclusion, the world economy will have to face months of disruption, due to the time needed to activate the strategic reserves and restore the interrupted infrastructure.
Hungary is exposed indirectly but significantly to the global energy shock, through the rise in European energy prices, the slowdown in foreign demand and the resurgence of inflationary pressures. The acceleration of prices at the global level increases input costs for Hungarian companies, particularly in energy-intensive sectors such as logistics, chemicals, agriculture, food processing, metallurgy, construction and wholesale trade. These shocks compress profitability, discourage investment and risk slowing the growth path, now estimated at 1.1% compared with the 2% previously forecast for 2026.
Real wage growth is under further pressure, in addition to the slowdown already expected as a result of the rise in producer prices linked to the conflict. Consequently, private consumption — currently the only real driver of growth — is set to weaken more than had been forecast before the crisis. A reduction in imports could offset this effect only in part. Meanwhile, the risks to foreign demand for the manufacturing sector remain tilted to the downside.
Fiscal risks are rising sharply. In January and February the deficit reached 2,103 billion forints, already equal to 39% of the annual target, owing to extraordinary payments, wage and pension increases with permanent effects and the reintroduction of the cap on utility prices. The decline in VAT revenue signals weak domestic demand. The conflict adds further difficulties: higher support costs (potentially +350 billion forints), rising yields linked to global risk aversion and lower tax revenue than expected. In the medium term, structural measures such as the fourteenth monthly payment for pensioners and the "Otthon Start" programme will exert growing pressure on public finances. Overall, the deficit for 2026 is estimated at 5.9% (compared with the 5.5% forecast), together with an increase in public debt.
Inflation, which temporarily fell to 1.4% in February from 2.1% in March, is expected to rise again. Despite the cap on fuel prices, the increase in production costs and the vulnerability of the forint will transmit global pressures to consumer prices. Inflation is expected to accelerate to 4.7% by the end of the year, with an average of around 3.3% in 2026. Monetary policy conditions are tightening accordingly: the National Bank of Hungary may follow the expected rate hikes by the ECB, reversing its previous more accommodative stance. The forint remains sensitive to market turbulence until the conflict is resolved.
Focus Economia in collaboration with UniCredit Bank.
