K&H: Optimism Has Eased Among SMEs

The rapid improvement in the outlook for Hungarian micro, small, and medium-sized enterprises – which characterized the second quarter – stalled in the third quarter, but SMEs remain optimistic in their forecasts, according to the latest data from K&H Bank’s SME Confidence Index.

In its Saturday announcement, the bank stated that the index fell by 7 points in the third quarter compared to the previous quarter, bringing it to 6 points. Although the index corrected by one-third of the 21-percentage-point surge seen between the previous two quarters, the indicator remained in positive territory.

They noted that the second quarter marked a breakthrough in the indicator’s history: following a sharp increase, the negative trend of the past five years reversed, moving into a sustained optimistic range.

The press release quotes Zoltán Rammacher, head of marketing for K&H’s retail and SME segment, who noted that the past quarter presented complex challenges for the SME sector. Heat waves and severe drought affecting agriculture, energy security risks stemming from the shutdown of a reactor unit at the Paks Nuclear Power Plant, and the negative impact on tourism caused by low water levels in major lakes all increased risks for companies. “In light of these extraordinary factors, the decline in the indicators is almost inevitable,” he added.

The gap widened when broken down by company size. While the largest companies, in terms of revenue, are the most optimistic about the coming year (10 points), sentiment among medium-sized enterprises deteriorated the most (-1 point), according to the report.

The quarterly K&H SME Confidence Index, which has been compiled continuously since 2004, is based on a survey of business decision-makers at 400 companies headquartered in Hungary with annual revenue of less than HUF 2 billion.