Economic hurdles complicate Orban’s path to re-election

Inflation rebound, sagging household morale, and a declining birth rate create obstacles for Orban ahead of the 2026 elections.

Hungarian Prime Minister Viktor Orban holds an international press conference in Budapest, Hungary, on December 21, 2024. Photo by Bernadett Szabo/Reuters

By Alana Salsabila and Clarisa Sendy

Hungarian Prime Minister Viktor Orban’s ambitions for securing another electoral victory in 2026 are facing mounting economic challenges that threaten his longstanding political dominance. Orban’s optimism that a strong economy will propel his Fidesz party to victory is increasingly being undermined by a combination of rising inflation, a faltering economy, and a sharp decline in Hungary’s birth rate. While the Hungarian government has historically relied on media influence and economic spending to secure elections, these factors may not be enough to safeguard Orban’s position.

A recent warning from Hungary’s central bank about heightened inflation risks has added to the growing list of economic concerns. The country, which endured the highest inflation surge in the European Union following Russia's invasion of Ukraine in February 2022, continues to grapple with persistent inflation. This issue is compounded by sagging consumer confidence and increasing pessimism about the financial future among Hungarian households.

Balazs Szent-Ivanyi, a political economist at Aston University focusing on Central Europe, believes that Hungarians have not experienced such a significant decline in living standards since Orban’s Fidesz party first took power in 2010. "Hungarians have not seen such a decline in living standards since Fidesz came to power," Szent-Ivanyi stated. This sentiment is echoed by a January EU survey that found consumers in Hungary are more pessimistic about their economic prospects than they were a year ago, with nearly four out of ten Hungarians expecting their financial situation to worsen in the near future.

The inflationary surge that began in 2022 has taken a significant toll on Hungarian households, with many families experiencing declines in real incomes. According to Szent-Ivanyi, the high levels of inflation in 2022 and 2023 have left lasting economic scars, leading to a decrease in purchasing power for many Hungarians. As a result, Orban's Fidesz party may struggle to win over voters who are dissatisfied with their declining standards of living, even though the government has maintained its influence through a network of pro-government media.

However, Orban’s government has historically used fiscal tools such as large-scale spending programs to strengthen its position ahead of elections. In the 2022 election, Orban launched a $5.35 billion spending spree to counter opposition challengers, a move that contributed to his landslide victory. While the spending did boost Orban’s popularity in the short term, it also contributed to the inflationary pressures the country is now facing.

Despite these challenges, Orban’s Fidesz party may still have an advantage. The media network controlled by the government can shape public discourse in the run-up to the 2026 election, potentially influencing voter sentiment in the party’s favor. However, as the economy struggles, voters may become less responsive to Orban’s economic rhetoric and more focused on tangible improvements in their daily lives.

Economic forecasts for Hungary in 2026

Looking ahead to the 2026 elections, Hungary's economic outlook does not appear promising. None of the 12 economists surveyed in a January Reuters poll expect the Hungarian economy to meet the 3.4% growth forecasted in the government’s 2026 budget. In contrast, Erste Bank, one of Hungary’s leading economic forecasters, predicts growth will be closer to 2%. Even the European Commission’s growth forecast of 1.8% suggests that Hungary will face one of its weakest economic stretches leading up to the next national election.

With these modest growth projections in mind, Orban faces the difficult task of maintaining his political grip while navigating a challenging economic landscape. The government’s efforts to boost the economy ahead of the election, including raising family benefits and increasing tax incentives for families, may not be enough to offset the economic challenges Hungary is facing. Despite these measures, Hungary’s birth rate, which Orban has long sought to boost through generous family policies, has continued to decline, reaching its lowest point in more than a decade.

As Orban’s government struggles with economic difficulties, political competition is intensifying. One of the key threats to Orban’s re-election bid is the rise of Peter Magyar’s centre-right Tisza party, which has gained momentum in recent months and has even surpassed Fidesz in some opinion polls. This surge in popularity signals the possibility that Orban could lose an election for the first time since he took power in 2010.

Nicholas Farr, an analyst at Capital Economics, suggests that the real prospect of Orban losing an election is becoming increasingly likely. "There is a real prospect of Orban losing an election for the first time since taking power in 2010," Farr said. This potential shift in political power could mark a dramatic change in Hungary's political landscape, with far-reaching consequences for both domestic policy and international relations.

As the election approaches, Orban will likely pull out all the stops to try to boost the economy and secure his political future. He will undoubtedly rely on his control of the media and public institutions to shape the narrative and persuade his core supporters that things will improve. Mujtaba Rahman, the Managing Director of Eurasia Group Europe, believes Orban’s communications machine is one of the most powerful tools in his political arsenal. "His communications machine is excellent for persuading his core voters that things will get better," Rahman said.

Orban’s election strategy and the risks of spending

In an attempt to boost the economy before the election, Orban plans to introduce a range of economic measures, including subsidies for home purchases and renovations, increased tax benefits for families, and capital injections for small businesses. These policies are designed to stimulate consumer spending and create a more favorable economic environment as the 2026 election draws closer.

However, Orban's reliance on large-scale handouts could backfire, as the Hungarian economy faces several structural challenges, including a weakening currency and an increasing budget deficit. The forint is currently near two-year lows against the euro, and Hungary’s deficit exceeds EU standards. If Orban embarks on another spending spree similar to the one that helped him win the 2022 election, it could trigger a market backlash, further weakening the forint and driving up prices for imported goods.

Credit rating agencies have already warned that Hungary could face a downgrade if its state finances deteriorate further. "The big risk is the budget towards the end of the year and the desire for election giveaways, potentially leading to a weakening of the forint," Rahman explained. "This would then feed through to price rises in imported goods, further exacerbating inflation."

As the election approaches, Hungarian public sentiment remains highly sensitive to economic conditions. A late-November survey by Policy Solutions, a Hungarian think tank, revealed that Hungarians are primarily concerned about their salaries, which remain among the lowest in the European Union. At the same time, food prices have soared, now averaging at EU levels, which further strains household budgets.

Andras Biro-Nagy, Director of Policy Solutions, believes that the key issue in the lead-up to the 2026 election will be whether Hungarians feel they can afford more from their income relative to the price levels that have emerged in recent years. "The main issue will be whether Hungarians feel like they can afford somewhat more from their income relative to the price levels," Biro-Nagy stated. This question could have significant implications for Orban’s political future, as economic factors increasingly dominate the electoral conversation.