The car sector, a mainstay of growth in central Europe, is headed for a slowdown as the conflict in Ukraine has worsened supply snags and is also pushing up prices for materials like nickel or palladium.
The market sell-off in the wake of the Russian invasion on Feb. 24, and a looming energy price shock in Europe due to a surge in global oil and gas prices, compound already strong underlying price pressures in the region.
"The Hungarian government will have to prepare now, and obviously after April 3, that the budget will have to be operated in a much more difficult economic situation," Varga said.
"Now the whole thing will obviously have to be redrawn," Varga said. "If we have a role in this (after the election), then the first and one of the most important steps will be to adjust the Hungarian budget to the damage and difficulties caused by the war."
Facing the prospect of a closely-fought election after three landslides, Prime Minister Viktor Orban has showered the electorate with tax cuts and other measures worth 1.8 trillion forints ($5.3 billion).
The nationalist prime minister has also imposed caps on the price of fuels and other goods to keep a lid on inflation but it has risen to near 15-year-highs even with the price controls, which are set to expire in the first half.
The 2022 budget, which targets a deficit worth 4.9% of gross domestic product, was passed with the assumption that the economy would grow by around 5% this year, but some economists have said the war has raised downside risks.
($1 = 338.95 forints)
(Reporting by Gergely Szakacs; Editing by Mark Potter)
