The outlooks of housing companies has been deteriorating since mid-2019. In April, the epidemic exacerbated the negative process. According to the results of the joint survey of GKI and Masterplast conducted in July, there was some rebound, a slight but positive correction both in the national average and in the capital compared to the previous quarter. Housing market players, especially in the capital, are beyond the shock of the epidemic and look a little more optimistic about the future, but their prospects are still not really optimistic in annual terms. At the same time, the market for home renovations picked up during the epidemic, and the turnover of building material stores increased significantly year-on-year. In the next year, the price of flats in Budapest may fall by an average of 5% and in the countryside by 8-13%.

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After a shock-like fall in the outlook for domestic economic agents in April, there was a significant positive correction in May and June. GKI’s economic sentiment index rose only slightly in July, by 2 points, as a combined result of improving expectations of consumers and business services, and stagnant expectations of other sectors. The consumer confi-dence index rose by 6 points this month and the business one by just 1 point compared to June.

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GKI currently expects the Hungarian economy to decline by 5-7 per cent in 2020 (assuming no second wave of the pandemic this year). In March, shortly after the announcement of the coronavirus emergency, GKI forecast two scenarios: one with a 3 per cent and another with a 7 per cent decline in GDP this year. Interestingly, in recent months the Hungarian government and the IMF published forecasts close to GKI’s less pessimistic figure, whereas the EU and the OECD published forecasts with the more pessimistic variant.

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Although the GKI economic sentiment index rose by a larger extent in June than in May, it elimi-nated only a smaller half (44 percent) of its April fall. According to the empirical survey con-ducted by GKI (www.gki.hu) with the support of the EU, the consumer confidence index rose to a greater extent in May and the business confidence one in June. This is mainly due to the fact that industrial expectations started to improve in June after their continuing deterioration in May.

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In May, presumably as a result of the lockdown easing measures announced by the govern-ment, almost all sectoral and consumer confidence indices increased and eliminated one-third of their dramatic fall in April. However, pessimism in industry intensified further. GKI’s eco-nomic sentiment index rose by 5 points to -28 points after falling by 29 points in April, still re-flecting pervasive pessimism. The consumer confidence index increased by more than 10 points and the business one by only 3 points. It is true, however, that the fall in April was also more pronounced in the business sector (37 and 25 points, respectively).

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You can reach the archive of survey summaries here.