AGP Executive Report

Paks II & nuclear risk: Ukraine is pressing the EU to sanction Rosatom after new claims of nuclear safety culture violations tied to the El Dabaa project, while Hungary continues to review the Paks II deal amid drought-linked cooling concerns. Energy & drought: Low Danube water levels are forcing Hungary and the region to rethink power and logistics, including measures to keep Paks running and reports of upstream transport disruptions hitting energy supply chains. Hungary housing & finance: Hungary’s green loan stock has topped HUF 1.1 trillion (€2.8bn), with energy storage emerging as the fastest-growing segment, and the government’s affordable rental push is back in focus. Commercial real estate: Hungary’s commercial property investment hit €610mn in H1 2026, the strongest since 2021, though recovery remains selective and still led by domestic investors. EU legal reform: Civil society groups are urging Hungary to improve a draft anti-SLAPP bill to better protect journalists and public-interest reporting. Business & industry: CEE Animation has opened applications for the CODA co-development awards, backing early-stage animation projects across Central and Eastern Europe. Markets & trade: Chinese automakers are shifting from exporting to local production in Europe, with BYD’s Hungary plant and broader localization plans drawing attention. Corporate moves: Arrow Electronics expanded IBM distribution coverage to seven more countries, including Hungary, supporting enterprise IT and hybrid cloud solutions.

Heat & Energy Shock: Europe’s heatwaves are hitting the economy and power systems hard, with drought cutting river flows and forcing nuclear curtailments; Ember says solar output rose up to 17% on heatwave days, helping grids despite higher demand (Hungary demand up to 23%). Danube Crisis for Hungary’s Power: Hungary is sinking barges near Paks to raise Danube water levels, as low water threatens cooling; Energoatom says Ukrainian nuclear plants handled abnormal heat without output cuts, while Romania partially shut down Cernavodă. Paks II Scrutiny: Leaked documents allege Rosatom safety and schedule problems at Egypt’s El-Dabaa plant using similar tech to Paks II, raising cooling and delivery concerns for Hungary. Housing Policy: Transport minister Dávid Vitézy says the government will incentivise rental construction via the Wekerle programme, arguing past measures left a housing deficit and prices rising faster than wages. Transport Safety: A Polish bus crash on Hungary’s M3 killed 12 and injured dozens; police suspect the driver may have fallen asleep, with investigations ongoing. Industry & Investment: Chinese automakers are expanding manufacturing in Hungary and beyond; BYD’s Szeged EV plant targets 150,000 vehicles/year (up to 300,000) with assembly starting Q4 2026. Agriculture: Hungary’s wine sector faces a potential ~30% grape yield drop as record heat and drought stress vines and reduce Danube-linked water availability. Crypto Fallout: BitMart’s founder escalates a dispute over unpaid salaries and frozen assets as the exchange winds down.

Energy & Nuclear Resilience: Hungary is racing the clock to keep Paks running as the Danube drops further; PM Péter Magyar says “superhuman work” is underway, with barges being scuttled to raise cooling water levels, a critical Tuesday–Wednesday drop expected, and an underwater weir progressing fast, while a Danube branch lock will be opened to add extra flow. Drought Impact on Industry: Europe’s worsening drought is already disrupting transport and power generation, with record-low rivers like the Rhine and Danube tightening freight capacity and raising costs, while Romania shut down its last nuclear unit due to cooling-water limits. Aviation & Tourism Connectivity: American Airlines adds six nonstop transatlantic routes in 2026, including Budapest (PHL–BUD), expanding direct links to Hungary and other European destinations. Geothermal Investment Outlook: A geothermal expert highlights how drilling-material costs and market swings affect projects, arguing that predictable regulation and experienced support can speed up development in Hungary’s Pannonian Basin. Road Safety Tragedy: A Polish coach crash on Hungary’s M3 killed 12 pilgrims; authorities are investigating, with early indications pointing to driver fatigue. Capital Markets: Emerging-market assets rose on softer US data and rate expectations, lifting currencies including the Hungarian forint.

Danube Crisis, Energy Security: Hungary has started sinking two 80-metre barges and building a riverbed sill near Paks to keep cooling water levels up as record-low Danube flows threaten reactor output; PM Péter Magyar says the aim is to avoid shutting down turbines and maintain gradual restart capacity. Regional Drought Impact: Europe’s shrinking rivers are now disrupting freight and raising costs, with the Rhine at record lows and drought deepening across Central Europe, including Hungary and Romania. Nuclear Risk Debate: Romania has already shut its last operating reactor at Cernavoda due to Danube cooling constraints, intensifying pressure on how to adapt nuclear power to extreme heat and low water. Hungarian Politics & Rule of Law: Hungary’s prosecutor general says the seizure of opposition Fidesz servers was unlawful in how it was carried out, while the government continues institutional changes post-Orbán. Geothermal Outlook: An interview with Gábor Molnár highlights how drilling cost swings and supply-chain constraints affect geothermal projects, arguing for predictable regulation to speed investment. Transport Safety: A Polish tourist bus crash in Hungary killed 12 and injured at least 10, with police citing a likely driver sleep at the wheel. EU Energy Trade: The EU bought 57% more Russian LNG in June, with Belgium the biggest buyer by value, while Hungary remains a major purchaser of Russian pipeline gas. Higher Education Links: Hungary’s Stipendium Hungaricum programme has sent 209 Pakistani students to Hungarian universities, the 11th batch under the scheme.

Energy & Climate Risk: Hungary is preparing emergency measures for Paks as record-low Danube levels threaten cooling capacity, including sinking two 80-metre barges and building a temporary river barrier; officials say one turbine could be forced offline if water drops further, while Romania has already shut its last reactor due to the same drought pressure. EU Funding & Infrastructure: Transport minister Dávid Vitézy says Hungary is pushing to recover the full €10bn EU recovery fund, with projects tied to milestones due by 31 August and motorway concession reviews underway. Banking & Markets: The National Bank of Hungary reports July changes in external assets, citing EUR bond issuance, forint moves, and shifts in swap liquidity. Rule of Law & Politics: Hungary’s prosecutor general says the seizure of Fidesz opposition servers was unlawful in how it was carried out, framing it as an overreach. Geopolitics & Energy Trade: EU Russian LNG purchases rose sharply in June, with Belgium the biggest buyer, while Hungary remains a major pipeline gas importer. Startup & Investment: Chinese high-performance motorcycle maker ZXMOTO secured a new funding round with Sequoia China investing 150m yuan at a ~6bn yuan valuation. Tourism & Culture: Sziget Festival says it drew visitors from 112 countries, with about half of attendees coming from abroad.

EU Recovery Funds: Hungary’s Transport and Investment minister says the government will “recover full €10bn” from the EU recovery pot, with motorway concession reviews and sector milestones due by 31 August to unlock releases. Energy & Water Security: With the Danube running dangerously low, Hungary is preparing to sink two barges near Paks to protect cooling water; officials warn output could be forced down if levels fall further. Nuclear Risk Across the Region: The drought is also hitting Romania hard, where record-low Danube levels have pushed the country to shut down reactors—raising questions for Central Europe’s nuclear-based power plans. Corporate Results: ANY Security Printing Company reported H1 2026 net sales of HUF 33.2bn (down 14% year-on-year), with stable 22% EBITDA margin and HUF 4.0bn net profit. Trade & Markets: Russia remains a major LNG supplier to the EU by value, with June purchases up sharply year-on-year, even as the EU moves toward a full LNG ban from 2027. Business & Mobility: Agoda data shows European travel interest in Asia is rising, with India the fastest-growing destination among Europeans in summer 2026 search trends.

Danube Drought Hits Nuclear Power: Hungary is moving fast to protect Paks as record-low Danube levels cut output to about 25%—the government plans to sink two 80-metre barges near the plant to raise water levels, while Romania shut down its last working reactor at Cernavodă due to cooling-water limits. Energy & Grid Stress: Ember reports heatwaves boosted solar generation (including up to 17% in Hungary) and demand surged, but the broader message is tighter grid resilience as extreme weather repeats. Nuclear Deal Under Scrutiny: PM Péter Magyar is publicly questioning the Rosatom Paks-2 expansion deal, arguing new reactors exposed to river-water cooling are no longer being built “in the world.” Trade & Tariffs Watch: The US accuses the EU and several member states—including Hungary—of enabling China-linked tariff evasion via transshipment, flagging a “Central and Eastern European processing belt.” Housing Push: Hungary’s government unveiled a potential up-to-EUR 3bn Wekerle Sándor rental and student housing programme, targeting brownfield and well-connected urban sites. Corporate Snapshot: Security printing firm ANY Security Printing reported H1 2026 net sales of HUF 33.2bn and stable EBITDA margin at 22%. Tourism Signal: Agoda says European interest in India is surging for summer 2026, with Hungary among the markets showing notable travel demand growth.

Energy & Drought: Hungary is moving to protect Paks by raising Danube water levels, including plans to sink barges and build a weir/sill near the plant after record-low flows disrupted cooling; the wider European heatwave is also forcing nuclear curtailments and raising power prices. Agriculture Support: The government approved extraordinary drought measures: farmers can receive earlier “super-advance” payments (September) with the advance rate lifted to 75%, with about 106bn forints earmarked for 150,000 farmers. Energy Security: Hungary granted three hydrocarbon exploration concessions (MVM Upstream in Baracska; MOL Upstream near Békéscsaba and Nagylengyel-Nyugat), with final contracts expected within 90 days. Real Estate (CEE): Colliers reports central Bucharest office rents up nearly 12% YoY by end-June 2026 amid limited modern supply. Procurement Integrity: Hungary’s Integrity Authority will publish a registry of economic operators excluded from public procurement due to criminal offences, tied to EU-funding resumption. Tourism & Environment: Lake Balaton’s Balaton midge swarms are worsening complaints from hotels and restaurants, prompting calls for a long-term management plan. Hospitality Investment: Europe hotel deal activity remains selective: €11.7bn invested in H1 2026, with Asia-Pacific investors driving volume.

Energy & Water Security: Romania shut down its only nuclear plant, Cernavodă, after record-low Danube levels cut cooling water; Unit 1 went offline in late July and Unit 2 followed on Aug. 13, with no restart expected within 10 days, while Hungary moves to keep Paks running via Danube interventions. Industrial Impact: The drought is also hitting logistics and production: Germany’s Thyssenkrupp is monitoring Rhine water levels and adjusting barge deliveries as shipping disruptions spread. Nuclear Policy & Investment: Urenco CEO warns that EU uncertainty over a possible ban on Russian nuclear fuel is delaying uranium-enrichment investment decisions. Public Procurement & EU Funds: Hungary’s Integrity Authority is setting up a register of economic operators excluded from public procurement after criminal convictions, tied to unlocking EU funding. Mobility & Transport Tech: Europe’s biggest battery-train order is entering certification at the Czech Velim test hub, a step toward diesel-free rural lines in Austria. Travel & Consumer Signals: Henley’s 2026 passport ranking shows a small group of passports granting access to 180+ destinations visa-free.

Danube Crisis, Energy Security: Hungary has ordered the immediate construction of a submerged bed sill/weir on the Danube between Paks and Dunaszentbenedek to protect cooling water for the Paks nuclear plant amid record-low river levels. The government says the works should keep the water level at the cooling channel above minus 90 cm within weeks, while two 80-metre barges can be sunk as a short-term backup to lift levels by about 20 cm. Magyar estimates a full Paks shutdown would cost at least 50bn forints per month, versus roughly 6bn forints for the emergency interventions. Water Supply Pressure: Budapest’s water utility is again urging residents to cut non-essential use as low Danube levels tighten production capacity, with the situation described as especially critical north of the capital in Dunabogdány. EU Space & Defense Tech: The EU and the Spacerise consortium have formally expanded IRIS², adding 66 satellites to bring the total to 348, with first launches due in 2029 and service from 2030—aimed at boosting secure capacity for EU defense and emergency services. Retail Real Estate: NEPI Rockcastle is making its first move outside Central and Eastern Europe with a €252m acquisition of MegaPark Barakaldo in Bilbao, signaling continued appetite for dominant shopping-centre assets. Aviation M&A: Pegasus Airlines has received Turkish competition approval for its Smartwings deal, covering AOCs in Hungary, Poland and Slovakia, with closing expected in 2026 after further EU review. Battery Rules: The EU’s “battery passport” regulation is set to reshape Europe’s battery market from Feb. 18, 2027, potentially favoring Korean suppliers over Chinese rivals due to supply-chain transparency requirements.

Danube Crisis for Paks Nuclear: Hungary is moving fast to keep the Paks nuclear plant running as record-low river levels bite. PM Péter Magyar says work starts Thursday on a submerged “bed sill” near Paks (35,000 m³ of rock first, then 110,000 m³), aiming to keep the cooling-water channel above -90 cm and potentially raise local levels by up to 1 meter. Emergency Backup Measures: Two 80-metre barges are being positioned and could be deliberately sunk to lift water levels by up to 20 cm if needed, with a final call expected Friday. EU Funding Shock: The Hungarian Development Bank reversed over HUF 66bn (€170m) in EU support for OPUS TITÁSZ just days after approval, citing transparency requirements—an abrupt move that could set a precedent. Air Connectivity: Wizz Air expands in Romania with a new Brasov base from Dec. 17, adding four routes (Barcelona, Madrid, Chisinau, Karlsruhe/Baden-Baden) and resuming Nuremberg service. Labour Policy: A proposal would make Christmas Eve (Dec. 24) a statutory public holiday in Hungary from 2026, avoiding the usual “work Saturday” make-up rule. Justice & Prisons: A Hungarian court orders Tököl Prison to pay HUF 8m compensation to a former inmate beaten by guards in 2018, including permanent health damage and PTSD.

Road & EU funding: Hungary will renew 570 km of national main and secondary roads in 210 locations this year, with nearly HUF 149bn allocated; 114 projects (324 km) are financed via the EU’s TOP Plusz programme. Energy & markets: European power prices jumped more than 20% in France and Germany as heat tightened nuclear and wind supply; the EU electricity system is said to stay stable, though conditions remain strained. Heatwave pressure: A continent-wide heatwave is disrupting transport, agriculture and river levels, with Hungary among countries seeing record temperatures and drought impacts. Danube shipping risk: Very low Danube levels are again exposing WWII-era wrecks and underlining how drought can disrupt power generation and inland shipping. Politics & contracts: The Prime Minister’s Office filed a criminal complaint over alleged misuse tied to Viktor Orbán’s social media contracts, involving former press adviser Fanny Kaminski and billions of forints in payments. Corporate fallout (EU): Dutch bicycle maker Accell has been declared insolvent, putting brands like Batavus and Sparta in limbo. Diplomacy: Ukraine’s Zelensky congratulated Hungary’s new president András Baka, framing it as part of Hungary’s “renewal.”

Heatwave & drought: Europe’s latest heatwave is tightening its grip, worsening drought and hitting river transport, power generation and agriculture, with Hungary among countries breaking records. Inland shipping squeeze: Historic low Rhine and Danube levels are forcing companies and cruise operators to reroute, swap ships and shift cargo to road and rail, with the Rhine crisis potentially dragging on for weeks. Romania nuclear risk: Romania may shut down Cernavodă Unit 2 within 48 hours as Danube levels fall below a critical threshold, while the EU monitors electricity supply security for Hungary and the region. Hungarian politics & public spending: Hungary filed a criminal complaint over millions of forints in public funds spent on Viktor Orbán’s social media contracts, while Parliament elected András Baka as president in a further break from the Orbán-era power structure. Energy market pressure: A partial solar eclipse is expected to spike German wholesale electricity prices briefly, underlining how weather-dependent renewables are reshaping costs. EU energy dependence: Russian LNG imports into the EU rose in June, with Hungary still among steady buyers despite sanctions. Business & jobs: Dutch bicycle maker Accell was declared bankrupt; Hungary’s Nestlé Diósgyőr factory closure points to broader confectionery restructuring.

Streaming & Media: RTL Group lifted its 2026 full-year EBITA outlook for streaming, with streaming revenue up 27.2% in H1 and adjusted EBITA improving sharply, as digital keeps outgrowing linear. Ticketing Tech: funcode.hu and Nuweb Group launched FunPass, Hungary’s official face-value resale platform aimed at keeping tickets valid and preventing overpricing on unofficial sites. Budapest Airport: Budapest Airport ended the 5-minute free taxi access period for Budapest-registered taxis, drawing criticism from the Taxi Association over higher costs and less convenient transfers. Drought & Energy: Romania’s Danube low levels could force Nuclearelectrica to shut its last working reactor as early as Aug 13, after emergency measures to divert cooling water. Inland Shipping: Europe’s drought is threatening to split the Rhine’s navigation system, raising freight disruption risks for the region. Climate & Health: OKF warned of a surge in invasive tiger mosquitoes across Hungary, with biological control efforts ramping up and spraying needed in parts of Budapest and Lake Balaton areas. Euro Adoption Watch: The National Bank of Hungary said meeting euro entry criteria would benefit the wider economy, while noting convergence depends on policy quality. Tourism & Travel: Cyprus airports handled 1.63m passengers in July, nearly matching 2025 levels, signaling continued regional recovery. Brand & Heritage: The Széchenyi family foundation says it will pursue legal action over the use of the Széchenyi name, citing a long-running dispute over trademark and fair-market rules.

Heatwave & Drought Shock: Western Europe is bracing for another scorching spell after June-July set record highs, with Britain and France issuing amber alerts and drought restrictions widening; the EU economy is projected to lose about €180bn (around 1% of GDP) as heat hits labor productivity, agriculture and public health. Danube & Energy Strain in Hungary: Low river levels are disrupting shipping and forcing output curbs at Hungary’s Paks nuclear plant, while drought is also reshaping power and water management across the region. Energy Markets: EU gas storage is lagging badly (Germany ~47.6% vs normal ~75% for early August; Netherlands ~38.5%), raising fresh supply-risk fears. Tourism Split: Croatia posted its strongest July in two years, while Türkiye’s tourism is softer amid inflation and geopolitical disruption. Hungary Media & Rule-of-Law: Hungary’s state broadcaster MTVA suspended news programmes after the Orban era; staff are still waiting on what comes next. Business/Deals: PPC is moving to acquire ABO Energy’s renewables pipeline in Hungary and Poland, expanding its Central European footprint.

Energy & Industry: Hungary began restarting a second turbine at the Paks nuclear plant after Danube levels rose, offering temporary relief after drought forced the plant down to about 10% capacity. Climate Risk to Business: Western Europe logged its hottest June–July on record, with heat, drought and wildfires hitting power, shipping and public health—economists warn the economic bill could run into the hundreds of billions of euros and keep growing. EU Living Standards: Eurostat data shows 61.4% of Romanians can’t afford a one-week vacation, while Hungary and Bulgaria both sit at 39.1%, underscoring uneven pressure on household budgets across the region. Energy Deals: MOL agreed to buy Shell’s stake in the Aphrodite gas field offshore Cyprus, taking a 35% participating interest in Block 12—an upstream bet aimed at de-risking development. Media & Jobs: Hungary’s state broadcaster MTVA remains in limbo for many staff after the suspension of news programmes, while conservative media groups report layoffs and shrinking ad revenues. Travel & Tourism Demand: Agoda says European searches for trips to India rose 14% year-on-year for summer 2026, with the UK the biggest source market. Hospitality Expansion: Accor opened its first Mercure hotel in Oradea, Romania, a €15m project positioned for Hungarian visitors near the border.