Hungary’s opposition predicted to win, but faces institutional hurdles
Election outcome may shift power, but economic challenges persist
We expect the upcoming Hungarian election to bring a change in power, with the Tisza-led opposition winning most parliamentary seats. After three years of stagnation, we think this result would support growth, which we forecast at 1.4% GDP in 2026. But risks around the election outcome, the power transition, and policy implementation are high.
Where we do not expect a major shift is fiscal policy. While opposition leader Péter Magyar has pledged to reduce the fiscal deficit, this mostly reflects structurally-high interest costs driven by high public debt and elevated risk premia.
Meanwhile, markets have front-run the likely change in power, but we think they have underplayed the scale of the challenge that the Tisza-led government will face, especially if the party doesn’t achieve a majority.
Although Tisza leads in election polls, we estimate there’s a 30% probability that Prime Minister Viktor Orbán remains in power. Should that happen, the resulting capital outflows and weaker sentiment could trigger a 15-20% equity sell-off and a 40bps-50bps rise in 10-year yields, leading to a softer, back-loaded recovery, and growth about 0.6ppts lower next year.
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