Hungarian economy hit hard by summer drought, MNB warns of sharp agricultural decline

The Magyar Nemzeti Bank’s latest inflation report highlights the severe impact of this summer’s drought on Hungary’s economy, particularly the agricultural sector. The bank estimates that the sector’s contribution to GDP could fall enough to reduce overall growth by a few tenths of a percentage point. It also revised its 2026 growth outlook down to 1.8 % from an earlier 2 % projection.

Yield estimates show corn harvests may be markedly lower than the five-year mean, while wheat and rapeseed are also expected to underperform, with reductions of roughly 22 % and 26 % respectively. Although food price pressure may be muted compared with the 2022 drought, the MNB warns that rising fertilizer costs linked to El Niño and Middle-East tensions could threaten future food prices.