The European Bank for Reconstruction and Development (EBRD) has forecasted Hungary's GDP growth at 1.5pc in 2025 and 2.7pc in 2026.
In its latest Regional Economic Prospects report released on Tuesday, the EBRD lowered the forecast for 2025 by 0.5 percentage points from the previous report published in February.
The EBRD said Hungary's economy was likely to be "heavily affected" by additional import tariffs imposed by the United States, noting that the country's exports to Germany accounted for around 18pc of GDP.
Increased uncertainty surrounding the outlook in the automotive and battery production sectors could have a "paralysing effect" on investment decisions, it added.
The EBRD said the previously anticipated beneficial impact of the launch in production in 2025 at local plants of China's BYD and CATL and Germany's BMW would likely be delayed until at least 2026, adding that private consumption was expected to drive growth in 2025 and 2026.
The EBRD said a government-mandated cap on markups on a range of food products was expected to reduce food price inflation by 2pp.