The subdued sentiment is visible in poor business expectations for 2025 but also in views of the overall investment climate.

With Germany being Hungary’s most significant trade partner, the views of German companies in the country give a prominent insight into its economic prospects. Numerous Hungarian and other foreign companies also participated in the survey; the results thus provide a reasonable cross-section of investor and business sentiment.

The latest DUIHK spring survey, based on responses from 236 firms, suggests that the climate for doing business is deteriorating. The chamber says that the declining confidence among foreign investors should be viewed as a red flag for Hungary’s long-term competitiveness.

Summing up this year’s findings, the chamber’s president, András Sávos, concludes: “There is no drama, but certain negative trends have become entrenched.”

According to the DUIHK survey, only 14% of firms expect an improvement in Hungary’s overall economy in the next 12 months, while 44% see it worsening. In recent years, only 2020 (COVID) and 2022 (Russia’s full-scale invasion of Ukraine) saw a similarly negative view.  

Companies generally rate their own business prospects somewhat better than those of the rest of the economy. This was the case in this year’s poll, too, but even so, the balance between optimistic and pessimistic answers was close to zero, the lowest since 2012.

This “flat” outlook is linked to the projections for total (and export-) revenues, which proved similarly weak. According to the DUIHK, this is related to the strong dependence of Hungary on the German economy: current projections for zero growth in Europe’s largest economy do not justify buoyancy for companies here.

These bleak expectations are also reflected in the assessment of key risk factors: Nearly three out of four respondents named a lack of demand as a threat to their own business.

Uncertain Outlook

In reaction to the uncertain market outlook, the investment intentions of the companies surveyed have dropped sharply. Only 16% plan to increase capital expenditure, half the figure seen last year. Meanwhile, 30% are considering a reduction in investment outlays. This translates into a negative net balance of 14 percentage points, the weakest result since 2010.

Hiring plans follow a similar pattern. The share of companies that plan to expand headcount is nearly the same as those considering a reduction, with industrial firms and highly export-oriented businesses expressing particular caution.

Labor shortages started to become one of Hungary’s most urgent economic bottlenecks around 2016-2017. This year, companies reported easing pressure regarding the availability of skilled labor, even in above-average critical areas such as blue-collar workers in production, IT experts or R&D personnel.

According to the report’s author, Dirk Wölfer, this aligns with the economic prospects, which reduce the overall labor demand. This, along with falling inflation rates, has a dampening effect on wages. This year, the managers surveyed anticipate a rise in labor costs of 7%, down sharply from last year’s 11%.

At the same time, satisfaction with the vocational training system and with higher education has improved. Altogether, the quality of the labor market again puts Hungary above the average of 16 other countries in Central and Eastern Europe, where German chambers produce similar surveys.

Although the DUIHK noted that the Hungarian incentive schemes for investments are seen as an advantage for attracting new FDI, and Hungary continues to score well in infrastructure and supplier networks, policy and regulatory environment evaluations are slipping.

Member ratings for legal certainty, procurement transparency, and corruption control have all worsened in recent years. An improving trend had started around 2012, but that came to a halt around 2020 and has gradually deteriorated since then.

Here, Hungary performs below the (already weak) regional average. The DUIHK’s Investor Sentiment Index (BHI) dropped from +3 to -4 in 2025, reinforcing the message that foreign investors are increasingly uneasy.

The DUIHK survey includes a telling question: “Would you choose Hungary again as your investment location?” This year, 78% of companies answered “Yes,” down from 88% four years ago. While this number still signals strong support, the 10-point drop reflects deeper concerns.

Clear Implication
 

The implications are clear: while foreign companies are not planning to pull out, they are unlikely to channel new investments into Hungary under current conditions, the chamber says.

The reasons for this shift are multifaceted. International dynamics, such as supply chain diversification, rising protectionism, and internal corporate restructuring, certainly play a role. But domestic challenges, including rising costs, regulatory complexity, and political risk, are becoming harder to overlook.

Notably, export-oriented manufacturers, Hungary’s traditional FDI drivers, are more skeptical than companies serving the local market. Their exposure to international competition makes them particularly sensitive to Hungary’s relative competitiveness.

Hungary is not alone in facing weaker investor sentiment. Across the CEE region, expectations for growth and investment are down. However, Hungary’s results consistently fall slightly below the CEE regional average.

The DUIHK says foreign-owned companies remain indispensable to Hungary’s economy. They create jobs, drive exports, and lead technological advancement. But this latest survey makes it clear that their confidence is slipping.

Hungary must act swiftly to restore trust among international investors, the chamber argues. This includes strengthening the rule of law, reducing bureaucratic uncertainty, and ensuring transparent, predictable policy-making. Failure to do so could delay new investments and prompt global companies to shift future growth elsewhere.

The complete analysis is available in Hungarian on the DUIHK webpage (duihk.hu); an English version will follow soon.

German Companies: A Cornerstone of Hungary’s Economy

Over the past three decades, foreign investors have played a pivotal role in Hungary’s transformation into a regional manufacturing and logistics hub.

German-owned companies alone employ nearly 230,000 Hungarians. They contribute about 11% to the value added in the total corporate sphere of the country. During the last decade, they have invested EUR 2 bln-3 bln annually into their Hungarian units, more than investors from any other country.

German firms’ presence is outstandingly strong in the automotive sector. German OEMs and suppliers generate about 60% of the industry’s total value added, and provide jobs to nearly 50,000 employees.

However, German companies are also active in many other areas, such as telecommunications, machinery and electrical equipment manufacturing, retail trade, and energy. As a result, Germany is responsible for one-quarter of Hungarian exports and imports, making the Hungarian economy quite dependent on German business cycles.

*********************************

You're very welcome to comment, discuss and enjoy more stories via our Facebook page: 
Facebook.com/XpatLoopNews + via XpatLoop’s groups: Budapest Expats / Expats Hungary

You can subscribe to our newsletter here: XpatLoop.com/Newsletters

Do you want your business to reach tens of thousands of potential high-value expat customers? Then just contact us here.