Slight Improvement in the Confidence Index of Companies

The confidence index showing the one-year expectations of Hungarian micro, small and medium-sized enterprises remained in the negative range in the last quarter, but the indicator improved by the end of the year, dropping from minus 14 in the previous quarter to minus seven points, K&H group highlighted in its announcement.

According to the financial institution, the reason for the shift may be that companies view somewhat more favorably this year's fall in labor force, economic policy and public burdens.

Zoltán Rammacher, head of marketing and sales support at K&H Bank, was quoted in the announcement as saying that usually, after a major downturn, the doomsday mood tends to ease a bit. This has also happened now, but despite this development, businesses are pessimistic about 2023, since the last time it happened six years ago, the indicator took on a negative value in two consecutive quarters, he added.

According to the research, the smallest companies with a turnover of less than HUF 100 million are still the most pessimistic, their expectations changed from minus 15 to minus 13 points in October-December compared to the previous quarter.

Medium-sized enterprises with a turnover of more than HUF 300 million start the year with much more favorable prospects, their confidence increased from minus seven to minus three points.

In the case of businesses with sales between HUF 100 and 300 million, it can only be said that their extremely negative mood of the previous quarter has significantly improved, as their confidence is at zero with a 15-point increase.

The expectations of agricultural companies are still in the positive range (with seven points), but the other sectors are much more pessimistic about the new year. The confidence of commercial companies was corrected from minus 15 to minus nine points, that of service companies from minus 14 to minus seven points.

The most spectacular change occurred in industry, where companies' expectations increased by 12 points after the shock of the previous quarter, so they are currently at minus six points – the financial institution explained the results of its research in its announcement.

Since 2004, K&H has been conducting a quarterly survey on the expectations of SMEs, most recently the decision makers of 400 Hungarian-based companies with an annual turnover of less than HUF 2 billion were asked with the involvement of Impetus Research between November 7 and 25, 2022. In the research, the ten economic factors that most influence the economic situation of enterprises are examined: customer relations, supplier relations, workforce, company finances, banks, economic policy, public burdens, EU, competitive situation, corporate loan interest rates.