Will the Croatian economy benefit from Magyar’s rise to power?

The political turnaround in Hungary could have more concrete economic effects than it initially seems, especially for Croatia, which is an important tourist partner, export market, and energy route for its northern neighbor. The greatest effect is expected through a possible thawing of European funds and the recovery of the Hungarian economy, which could spill over into tourism, trade, and investments, while energy relations will remain significantly more complex and slower to resolve.

Economic analyst Velimir Šonje believes that this European factor is crucial for understanding what follows after the elections. He does not expect sudden changes overnight, but notes that the first effects of stabilization could become visible in a relatively short time.

Tourism as one of the first signals

In other words, Hungary has been in stagnation for a long time, and the political change could act as a trigger for a return to growth. This growth, although it will not be instantaneous, could relatively quickly spill over into neighboring markets, including Croatia. Šonje emphasizes that the first signals should not be sought in large investments, but in everyday economic flows such as tourism.

– It is difficult to expect major turnarounds in a few months, but in the perspective of next year, and perhaps already in the second half of this year, the first positive changes could be felt. As you yourself point out, primarily in tourism. Hungarians account for more than four percent of total overnight stays by foreigners in Croatian tourism, and last year, due to economic difficulties there, we recorded a decline in overnight stays by Hungarians of almost three percent – explains Šonje.

The decline in arrivals of Hungarian guests may not seem dramatic at the level of total tourism, but it is a signal of a broader problem – the weakness of the Hungarian economy. That is why a potential recovery across the Drava has broader significance. If disposable income and consumer optimism increase, it almost automatically reflects on tourist flows to Croatia, but also on other sectors.

An even stronger effect could come through trade, where the two countries are already deeply connected, but last year they experienced a serious decline in activity.

– Let us not forget trade because we are very important trading partners. Hungary has a large surplus in trade with Croatia, but the potential of at least 1.5 billion euros of Croatian goods exports to Hungary, which we almost reached in 2024, suffered a serious blow last year when our exports to Hungary fell by more than 20 percent – he adds.

Such a decline, of course, is not just a statistical figure, but also a good indicator of how interconnected and sensitive the economies are to changes. Šonje therefore emphasizes that a recovery in Hungarian growth would automatically mean an increase in demand for Croatian products, which opens up space for a relatively quick positive effect on Croatian exporters.

Hungarians are better at attracting money

When it comes to investments, expectations are significantly more moderate. Although political stabilization could improve the investment climate, Šonje warns that Croatia cannot count on an automatic advantage here.

– Hungary has been systematically more successful than Croatia in attracting FDI for almost 30 years, especially in the sectors you mention. This was the case before Orbán, with Orbán, and it will likely be the case after him – he asserts, referring to our questions about the future of industry and logistics.

In other words, the problem is not in competition with Hungary, but in the domestic institutional framework. Faster administration, a more efficient investment agency, and a more proactive approach to investors have long given Hungary an advantage that a political change will not erase.

At the same time, Šonje sees room for progress precisely where relations have been most burdened for years – in energy. However, he emphasizes that this is a process that will be slow and complex, without quick political solutions.

– These are difficult questions and problems that have not arisen overnight, so they will not be resolved overnight either. However, the reason for optimism regarding the resolution of open energy issues is certainly the political will that is opening up with the arrival of Péter Magyar and Tisza, who belong to the same European political group EPP as Plenković and HDZ – says Šonje.

In other words, the political compatibility of Zagreb and Budapest is for the first time in a long time a factor that favors the resolution of open issues. However, this is just a starting condition. Aligning interests in energy, especially when companies like MOL and strategic infrastructure like JANAF are involved, will require a long and complex process.

– This is a necessary condition to start addressing open topics. Sufficient conditions are much more complex. It is not easy to overcome the past and align interests. It will be laborious, but the opportunity exists, and it would be a shame not to take advantage of it – he adds.

Šonje also broadens the perspective beyond energy itself, warning that the eventual resolution of these issues could have broader, capillary effects on the economy.

– In this way, the potentials for cooperation in numerous other fields and sectors would somehow be ‘unclogged’, the effects could be capillary, because when you have two neighboring countries operating in a single European market that communicate and trade relatively poorly, then you can be sure that the potentials for expanding cooperation for mutual benefit through trade and investments are much greater than the potential problems that may arise in areas where we are direct competitors – concludes Šonje.

Mild doubt about a revolutionary turnaround

Energy expert Igor Grozdanić warns that one should not be carried away by the idea of a sudden change in Hungarian policy, regardless of the political context.

– To begin with, one should be very cautious about changing Hungary’s direction in energy, especially rapid changes in direction in management and specific projects from the Hungarian side. Studying the team around Mr. Magyar for months before yesterday’s elections, I can only express mild doubt about any revolutionary turnaround, especially regarding the energy sector, but we will certainly know more about this once things settle down after the elections – he asserts.

Such caution arises from the fact that energy policy is not just a matter of political will, but also of long-term contracts, infrastructure, and the interests of large companies. That is why Grozdanić broadens the focus from JANAF to the wider regional context.

– The question of the stance on JANAF will remain. What we should really be interested in is MOL’s stance on the purchase of NIS? Here we see that a problem has arisen, what next? The question of NIS is a multilayered and multifaceted regional geopolitical and market issue – he adds.

Grozdanić thus clearly conveys that key decisions will not be made exclusively in Zagreb and Budapest, but in a broader regional framework where the interests of energy companies and states overlap. In this context, the question of INA, which has remained unresolved for years, is reopened.

– What interests me, and certainly the Croatian public, is what is happening with INA. Will anything move there? – Grozdanić wonders.

Historical crime of Viktor Orbán

Although he expects a calming of political tones, Grozdanić believes that quick solutions are definitely not in sight. However, he emphasizes that relations will likely become more constructive, but the question remains how much Croatia will benefit from this in the short term. At the same time, he reminds of Croatia’s real position in the energy picture of the region, which is already significant regardless of political relations.

– JANAF is an important pillar of Hungary’s energy supply, no matter how much they sometimes deny it. I certainly hope for an improvement in relations, as it is in the interest of both sides, geopolitically and towards Brussels, but also in business. Things need to return more to business, economic, and commercial foundations – he says.

Such a view aligns with the political signals coming from Budapest. Namely, Péter Magyar has already announced that he will try to reset relations with neighbors, including Croatia, but also open questions that have remained unresolved for years.

– INA-MOL is a long story from which lessons need to be learned. I only know that it is not a coincidence that Hernádi has not been extradited. These are very confidential information that I am not aware of, but as soon as we start working, I will dedicate myself to it – he stated.

At the same time, he clearly indicated that he considers the political tensions of the past to be an obstacle that needs to be removed in order to open up space for cooperation.

– I consider it a historical crime of Viktor Orbán that relations between Croatia and Hungary have cooled so much – he said, with the message that relations should be built looking towards the future.

Whether Croatia will maximize its potential in this new future without Orbán remains to be seen.