GKI economic sentiment index rose markedly in July

imagebase22_50_kicsiExpectations of industrial and especially service companies improved considerably in July in the business sector, whereas those of commercial and construction companies deteriorated slightly. The industrial confidence index has not been so high for a year and a half. The assessments of both production and the stock of orders (including exports) have improved. Industrial companies considered their capacity utilization more favourable than a quarter before; however, their competitive position was assessed as decaying.

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Forecast for 2016

nyilDue to the decrease of EU transfers and hence public investments, the deceleration of GDP growth in the first quarter of 2016 could have been foreseen. Nevertheless, in the light of the investment restraining effects of the Hungarian model that had been at work for six years the slowdown proved to be unexpectedly spectacular. In addition, in some segments of industry sales problems appeared in the first quarter.

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Business expectations deteriorating since January

160627The GKI economic sentiment index stagnated both in May and June. According to the empirical survey conducted by GKI (www.gki.hu) with the support of the EU both busi-ness and consumer expectations declined in June compared to May; however, changes were within the statistical margin of error, particularly in the case of consumers.

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Economic growth slowing down – household consumption accelerating

zacsikIn the first quarter of 2016 only the GDP growth rate of Greece was slower than that of Hungary. Because of this data, which was worse than expected, GKI lowered its growth forecast for 2016 from 2.3 per cent to 2 per cent; however, the actual growth rate can be even lower than this. Owing to the fall in construction, the decline in investments will be more significant, around 8 per cent. However, due to the rapid increase in earnings, the expansion of consumption may be 3.5 per cent.

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GKI economic sentiment index stopped to decrease further in May

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The decline of the GKI economic sentiment index, which started in January 2016, stopped in May, and it even slightly increased. According to the empirical survey conducted by GKI (www.gki.hu) with the support of the EU, the business confidence index remained unchanged compared to April. However, consumer expectations almost reached their peak value this year.

 

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