In February, both business and consumer expectations improved, but continued to reflect a poor mood. According to the empirical survey conducted by GKI Economic Research Co. with the support of the EU, consumers were still more pessimistic than they were in 2020, during the panic that started when the Covid pandemic broke out. In comparison, busi-ness sector expectations were more favourable, broadly in line with the end of 2020. Ser-vice companies were now the least pessimistic, while industrial companies were the least pessimistic in January. The perception of the employment situation changed little, but companies’ efforts to raise prices and consumers’ inflationary expectations declined markedly.
GKI’s economic sentiment index may be past its lowest point
In January, GKI’s economic sentiment index rose marginally, but for the third month in a row. According to the empirical survey conducted by GKI Economic Research Co. with the support of the EU, the overall improvement in the consumer confidence index during this quarter is still within the statistical margin of error and remains below the panic levels seen at the onset of the Covid pandemic. The rise in the business confidence index is slightly more noticeable, at a level broadly similar to two years ago. Both companies and households were much more optimistic about the outlook for the Hungarian economy than in December.
By the end of 2022, the more than half-year decline of GKI’s economic sentiment index stopped
Business and consumer expectations improved modestly in December. According to a survey conducted by GKI Economic Research Co. with the support of the EU, the rise in the business confidence index was solely due to a significant improvement in industrial expectations, as other sectors became more pessimistic to a greater or lesser extent. The consumer confidence index has been rising, albeit marginally, for the second month in a row. However, households remained more pessimistic than during the Covid-related panic in spring 2020. The views of businesses and households on employment and inflation were unchanged in December, but both businesses and households saw the future situation of the Hungarian economy as worse than in November.
The forecast of GKI Economic Research Co. for 2022-2023 (4/2022)
Hungary’s GDP fell by 0.4 per cent in the third quarter of 2022 compared with the previous quarter, bringing the Hungarian economy close to a technical recession. GDP is still growing at an annual average rate of 5.2 per cent, but the rate is falling by around 2 percentage points per quarter, with a decline of 1-1.5 per cent expected in 2023.
GKI’s economic sentiment index has been falling for more than half a year
The business confidence index fell slightly further in November after a big drop in October. Con-sumer sentiment, on the other hand, improved slightly, although it remained gloomier than its terrible pessimism of September. According to a survey conducted by GKI Economic Research Co. with the support of the EU, business expectations were similarly negative during the Covid period of early 2021. Consumers were still more pessimistic than they were in the Covid panic of spring 2020. The good news, however, is that the business sector’s willingness to employ slightly strengthened, its intentions to raise prices weakened, while consumers’ fear of unemployment and inflationary expectations also changed in a favourable direction.