German Investment in Hungary Hits Decade Low Amid Economic Uncertainty

The inclination of German companies to invest in Hungary has dropped significantly, marking the lowest level since Prime Minister Viktor Orban assumed office in 2010, according to the German business chamber. Weak demand and uncertain economic forecasts are undermining business confidence.

A recent survey involving 236 German companies operating in Hungary suggests that the nation faces economic stagnation contrary to the optimistic growth forecast of 2.5% for the year. The first-quarter data reveals that Hungary's economy remains in stagflation with European Union-leading inflation rates.

Germany's position as Hungary's largest foreign investor means its economic stagnation increasingly affects Hungarian prospects, exacerbated by inflationary pressures following Russia's 2022 invasion of Ukraine. Surveyed companies cite poor demand as a primary concern, contingent on resolving U.S.-Europe trade conflicts.

(With inputs from agencies.)