BUDAPEST, Jan 30, 2026 (BSS/AFP) - Hungary's economy grew 0.3 percent last year, statistical office KSH said Friday, confirming a sluggish performance as Prime Minister Viktor Orban gears up for a contested re-election bid.

The nationalist leader, who is seen trailing behind the opposition in polls ahead of the April election, had promised an economic "flying start" for 2025, with the government originally forecasting a 3.4 percent growth.

But the export-oriented central European country of 9.5 million has been severely impacted by declining external demand amid global trade disruptions.

"Compared to 2024, the Hungarian economy essentially stagnated last year," said Orsolya Nyeste, an economist at Erste Bank.

But she predicted a return to stronger growth this year "thanks to a revival in external demand and an improving European economy".

"Overall, we expect annual GDP growth of two percent in 2026, but the risks are skewed to the downside, as the lack of momentum at the end of last year is also casting a shadow over this year's growth prospects," she said.

In November, industrial production declined to a level not seen since the height of the Covid-19 pandemic five years ago.

Economy Minister Marton Nagy blamed the tepid growth on the fallout from the war in Ukraine, as well as "weak EU competitiveness, and weak external demand".

In a Facebook post, he said the government had offset these factors "by stimulating domestic demand; without this, the economy would have fallen into recession".

The government has adopted a series of substantial welfare measures in recent months, including heating subsidies, six-month bonus pay to law enforcement officials, and tax exemptions to some mothers.

Economists have said the spending measures could pose a substantial budgetary challenge going forward.