Deloitte: Financial Managers More Optimistic

Financial leaders in Central Europe are significantly more optimistic about 2023, with an improvement in the business environment in particular, but also a positive shift in other areas, according to a survey published by Deloitte on Tuesday.

In a survey summarizing the views of Central European finance executives, Deloitte asked more than five hundred regional finance executives for their opinions.

The CFO Confidence Index rose from minus 15 points in 2023 to plus 17 points. The assessment of the current economic situation climbed from minus 6 points last year to plus 3 points. The Business Environment Index rose from minus 46 to plus 31 points, while the Business Outlook Index rose from plus 7 to plus 18 points.

On average, financial managers expect GDP growth in the region to reach 1.1% this year, up from 0.3% a year ago. Only 38% of respondents expect unemployment to rise, down from 68% a year ago. On inflation, 57% of respondents expect the rate of price increases to rise, which could be a warning sign.

Thirty-six% of Hungarian finance executives expect GDP growth to be medium, between 1.6 and 2.5% this year, while 27% expect 0.5% and another 27% expect 0.5 to 1%. According to Deloitte's survey of corporate finance professionals, 46% expect the unemployment rate to remain unchanged over the next year, while 38% expect it to rise.

In Hungary, labor market expectations are balanced, with 37% of respondents expecting unemployment to rise, 36% expecting stagnation and 27% expecting a decline.

Inflation has fallen significantly in all countries in the region in 2023, and business leaders do not expect a similar continuation this year. Hungary is the most optimistic, with almost four in five respondents expecting a further moderation in the pace of price increases and only 27% expecting inflation to rise.

On the business outlook, the survey shows a decline in the proportion of respondents who see significant uncertainty, but still a majority of these financial managers. Almost all respondents (94%) still expect labor costs to rise in 2024.

Almost a third of exporting company managers consider the supply chain situation to be critical. Only 27 per cent of Hungarian finance executives surveyed think it is time to take risks now, while 73 per cent continue to prioritize security.

Among the risks, most cited a shortage of skilled labor, rising geopolitical tensions and increased regulatory action in Central Europe.

Less than half of Central European executives, 45%, expect an increase in M&A activity, compared to 55% of Hungarian respondents. Cautious optimism is also reflected in the financial outlook for their own companies, with 37% of finance executives expecting improved results, while almost the same proportion expect their results to stagnate and 27% expect a deterioration in 2024 compared to last year. Hungarian executives are perhaps slightly more optimistic than average, with 55% expecting a similar result this year to 2023, 36% expecting