Hungary's industrial sectors experienced a decrease in production volumes in January 2025, particularly in the automotive, electrical equipment, and food, beverage, and tobacco manufacturing industries.

Reports indicate that while production in these dominant sectors fell, sectors such as computer, electronics, and optical product manufacturing saw an increase.

Seasonally and calendar-adjusted industrial output grew by 0.8 percent compared to the previous month.

This downturn is compounded by the ongoing decline of the German economy, which has been shrinking for the second consecutive year, an occurrence not seen since 1950. The challenges faced by the German economy have been identified as a key factor in the current industrial performance of Hungary.

Recent reports detailed a pivotal moment for Germany as Chancellor Friedrich Merz is expected to announce a €1 trillion economic stimulus program focused on infrastructure development and defense expenditures.

This initiative may involve changes to the country's debt brake rules, which traditionally restrict budgetary deficits.

Additionally, the proposed tariffs by the United States threaten to undermine the export-driven economic model prevalent in Germany.

The Hungarian Ministry of National Economy has commented that external factors continue to hinder the performance of domestic industries.

This includes competitiveness issues within the European Union and the economic crisis in Germany, which limits Hungary's export-driven economic activities.

In response, the Hungarian government aims to bolster economic performance through initiatives such as the '100 New Factories' program, designed to significantly contribute to industry revival.

Significantly, indicators of recovery within the Hungarian economy are increasingly evident.

Consumer confidence is reportedly rising, as highlighted by a sustained period of real wage growth over the past 16 months, record-high employment levels, notable growth in consumption, an increase in household lending, a dynamic rise in property transactions, revived new and used car markets, and an expanding construction order book.

The tourism sector in Hungary is also experiencing a resurgence.

To further support the economy, the government has launched the New Economic Policy Action Plan, which focuses on assistance for domestic micro, small, and medium-sized enterprises (MSMEs) through 21 key measures.

The Demján Sándor Program allocates HUF 1.4 trillion, comprising non-repayable grants, subsidized loans, and capital programs aimed at enhancing the productivity of Hungarian MSMEs, thereby strengthening the industrial sector.

Furthermore, significant investments by companies such as CATL, BYD, BMW, SEMCORP, and EcoPro are expected to inject additional momentum into Hungary's industrial landscape.