Polls suggest Prime Minister Ferenc Gyurcsany's Hungarian Socialist Party and its liberal ally, the Alliance of Free Democrats, are likely to win the second-round ballot, but with a slim majority.
It would be the first time a Hungarian government has been elected for a consecutive term since the collapse of communism in 1989. Mr. Gyurcsany's main rival is 42-year-old Viktor Orban, the right-leaning former prime minister of the Fidesz party.
While the ruling coalition embraces globalization and foreign investments, Fidesz campaigns against what it calls "wild capitalism." Fidesz-leader Orban has said he would re-nationalize key companies, including the Budapest airport, which has been sold to British Airports Authority.
And he warns voters in rural regions that re-electing the Socialist-led government will mean more unemployment and social upheaval. "Thousands of people are already losing their jobs and many more will lose their work places," he says. He adds that "the prices of gas, electricity and medicines will increase" because of lack of regulations, and warns that "the huge budget deficit" will make Socialists "sell everything they can."
However, Fidesz has failed to win the support of a smaller, right-wing party and potential kingmaker, the Hungarian Democratic Forum.
Prime Minister Gyurcsany, a 44-year-old, self-made millionaire, says globalization, including renewed cooperation with Russia, benefits Hungary.
In the first round of voting two weeks ago, the government coalition won 113 seats. The center-right opposition won 97. Another 174 seats in the unicameral parliament are to be decided in Sunday's voting.
The election campaign in Hungary has been bitter. This teacher says politics has entered people's personal lives. "People attack each other for the way they voted and their beliefs," she said.
Whoever wins Sunday's election will have to deal with decreasing the country's budget deficit. It reached over six percent of gross domestic product in 2005, and threatens to delay the planned adoption of the euro currency in 2010. First official results are expected late Sunday.