Published by Jessica Weisman-Pitts
Posted on December 19, 2024
2 min readLast updated: January 28, 2026
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By Gergely Szakacs
BUDAPEST (Reuters) – New tariffs U.S. President-elect Donald Trump has pledged to impose on European Union imports would hit Hungary’s economic growth and boost inflation, the National Bank of Hungary (NBH) said in its quarterly inflation report on Thursday.
Germany is expected to be more affected by any U.S. tariffs than other euro area members, Nomura forecasts, which will have a knock-on effect on Central Europe given its deep trade ties to Europe’s largest economy.
These are particularly strong in the automotive sector, with the region sending 20% to 30% of its exports to Germany.
The Czech Republic, Hungary and Slovakia are considered the most exposed as suppliers and manufacturing bases for German brands, S&P Global said in a report last week.
“There is a risk that customs duties against the EU could be extended, and rates of duty increased,” the NBH said after raising its 2025 inflation forecast by 50 bps to a range of 3.3% to 4.1%.
“In this respect, the focus was mainly on the exports of European car manufacturers, which may have a significant impact on the sector, which is of particular importance for Hungary.”
The NBH left its base rate steady at the European Union’s joint highest level of 6.5% on Tuesday, as widely expected, after falls in the forint since its latest rate cut and tax hikes have sharply raised next year’s inflation path.
Even so, rate-setters see upside risks to inflation and downside risks to economic growth under the bank’s baseline economic scenario.
On Thursday the forint, central Europe’s worst-performing currency, which fell more than 8% to the euro this year, skirted two-year-lows, pressured by a shift in the U.S. rate outlook.
The NBH said any extension of protectionist measures posed a “substantial risk” to global growth and could exacerbate the vulnerability of small economies like Hungary, whose export share relative to output is among the highest in the EU.
“In this alternative scenario, the external inflation environment will thus be higher than expected, causing a ripple effect in domestic prices,” it said.
“The scenario is consistent with a higher inflation and lower growth path than the baseline.”
(Reporting by Gergely Szakacs; Editing by Emelia Sithole-Matarise)
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI) or the Producer Price Index (PPI).
Monetary policy refers to the actions taken by a country's central bank to control the money supply and interest rates to achieve macroeconomic objectives such as controlling inflation, consumption, growth, and liquidity.
Foreign exchange, or forex, is the global market for trading national currencies against one another. It is the largest financial market in the world, where currencies are bought and sold.
Economic growth is the increase in the production of goods and services in an economy over a period of time, typically measured as the percentage increase in real GDP.
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