Hungary's economy delivered a double surprise in April 2025 as both industrial production and retail sales exceeded market expectations, according to data released by the Hungarian Central Statistical Office (HCSO). However, economists warn that this upswing may be short-lived, with concerns lingering over sustainability and the impact of global trade tensions.
Following a disappointing first quarter, April's data provided a much-needed boost, with industrial output rising 1.5% month-on-month and retail sales increasing by 2%. Year-on-year, industrial production contracted by only 2.3%, a marked improvement from March's -5.4%, and well above ING's forecast of -3.2%. Retail sales, meanwhile, surged 5% compared to April 2024, significantly outperforming ING's 0.2% estimate.
'For the first time in a long while, the Hungarian industrial sector produced a significant positive surprise,' said ING's Senior Economist for Hungary, Peter Virovacz.
Yet, despite this improvement, caution prevails. 'The key question is whether this was a one-off improvement or whether the industry has finally bottomed out,' said Virovacz. 'Unfortunately, we have seen something similar in the last year or two, when industry has only been able to recover for a month or two at a time.'
Preliminary figures show most industrial sub-sectors continued to contract year-on-year, except for the manufacture of electronic products. Labour hoarding persists, but confidence indices remain weak, and early signs point to a slow reduction in workforce numbers after prolonged industrial stagnation.
External factors also weigh heavily on outlooks. 'The recent recovery in German industry can be seen as a positive sign,' Virovacz noted. 'However, German industrial data for April was much weaker than expected, which somewhat tempered the optimistic picture.'
Retail performance in April was more broadly positive. 'Following two months of weak performance, retail trade has recovered,' ING trainee economist Kinga Havasi observed. 'There is a growing sense that a sustained recovery in retail sales has emerged.'
Much of the gain was attributed to food store sales, which saw their largest monthly increase since summer 2024. Mail order and internet sales also rose more than 2% for a second consecutive month, likely boosted by fears of a tariff war prompting front-loaded purchases.
Still, ING analysts remain wary. 'There are many indications that this is another one-off surge, which could be followed by a correction in the coming months,' Havasi added. Government policies, such as delayed extensions to food price caps, may have artificially inflated April figures, while front-loading due to tariff uncertainty played a significant role.
Fuel sales also surged 3% month-on-month, buoyed by long weekends, contributing to the overall retail uplift.
Despite the concerns, ING maintains a cautiously optimistic forecast for retail in 2025. 'We still expect the sector to grow at an average annual rate of around 3–4% this year, but with upside risks,' Virovacz concluded.
While Hungary's economic green shoots are welcome, the road to recovery remains fragile, buffeted by domestic caution and international instability.
More information:
ING
www.think.ing.com