Hungary’s planned adoption of the euro will fundamentally shape the country’s medium-term economic outlook, although the common currency should be regarded as a means rather than an end, the GKI Economic Research Institute said in an analysis.
The researchers said the planned introduction of the euro would be the most important economic issue facing Hungary in the coming years, with its economic and financial significance comparable to the country’s accession to the European Union in 2004.
Adopting the euro would represent a strategic decision that would reshape the framework of the Hungarian economy and significantly alter the room for manoeuvre available to economic policymakers, GKI said.
Beyond the Maastricht criteria, the institute identified four areas requiring particular attention: the international and geopolitical environment, structural challenges in the Hungarian economy, the structure of the state budget and the appropriate monetary policy strategy.
GKI said there were several possible paths to economic success, while deciding how to achieve that goal was a task for the country’s economic policymakers. It said the new government had made a clear decision to pursue economic success through euro adoption. ‘The real question is not whether the euro is worthwhile, but under what conditions its introduction can truly be successful,’ the analysis said.
According to GKI, Hungary currently meets only the Maastricht inflation criterion. However, market pricing suggests investors already expect Hungary to join the euro relatively quickly and with limited disruption, as reflected in a significant decline in government bond yields and risk premiums. The expected benefits of euro adoption include permanently lower interest rates, a more stable financial system and the effective elimination of exchange-rate volatility, GKI said. At the same time, abandoning the forint would mean Hungary would lose the ability to respond independently to country-specific economic shocks through its own monetary policy, the researchers warned. The institute also stressed that euro-area membership would create an irreversible link with the wider monetary union.
GKI said a stable international environment would be necessary for a successful transition, but such conditions could not currently be taken for granted. High energy prices and rising international yields were also creating risks of higher inflation and weaker global economic growth, it said. The analysis also highlighted structural weaknesses in the Hungarian economy. GKI said a competitive economy with a level of real development comparable to Western European euro-area countries was needed for successful participation in the common currency, while Hungary’s position remained mixed.
The Hungarian economy had effectively stagnated between the end of 2022 and 2025, while growth reached 1.7 per cent in the first half of 2026, according to the analysis.
GKI said deeper structural problems also remained. The extensive growth model that had previously supported Hungarian economic expansion had run out of momentum, while productivity gains remained modest despite significant wage growth.
The transition towards a knowledge-based economy was also lagging, while low-value-added production continued to account for a substantial share of economic activity. High energy intensity and concentrated sourcing further increased the economy’s vulnerability, the institute said.
GKI identified the medium-term fiscal path as another critical issue, arguing that a credible euro adoption plan would require credible fiscal consolidation.
The government’s stated objective is to reduce the budget deficit through economic growth. According to GKI, its approach is focused on expenditure and relies on credibility, external funding, and stronger private-sector lending as monetary policy becomes more accommodative.
However, the starting position is challenging. GKI said the government would have to finance development needs alongside an expected general government deficit of 7.5 per cent of GDP and public debt of 77.5 per cent in 2026. The institute questioned whether European Union funding alone would be sufficient to meet those needs.
Lower debt-servicing costs could provide one of the most important sources of fiscal consolidation, GKI said. An earlier estimate suggested that interest savings could reach as much as 2.4 trillion forints over four years.
However, rising yields are working against such savings, while the share of foreign investors in Hungarian government debt is increasing, according to the analysis.
GKI also examined the prospects for achieving sustainable price stability. Although inflation is currently the only Maastricht criterion Hungary meets and inflation expectations are declining, the institute said the situation remained challenging.
‘Hungary needs a successful euro transition rather than simply a rapid one’
Hidden inflationary pressures remain in the form of postponed investment and continued price controls, while the current low-inflation environment has come at a significant cost, the researchers said.
The central bank is currently maintaining a real interest rate of around 300 to 400 basis points, according to GKI. This has contributed to a strong exchange rate and, consequently, rapid real appreciation of the forint, it said.
A key question for euro adoption will therefore be whether Hungary can maintain moderate inflation under a lower real interest-rate environment comparable to that of the euro area, the institute said.
Hungary needs a successful euro transition rather than simply a rapid one, GKI concluded. The timing of adoption and allowing sufficient time for adjustment in the real economy will be at least as important as the political decision to join, while the exchange rate at which Hungary enters the euro area will itself be a crucial issue.
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