GDP Growth Below 0.5% Expected by Firms in the Region

CFOs of Central European companies expect an average GDP growth of 0.33% this year compared to 2.3% in 2022, close to the 0.25% expected in 2021 during the coronavirus epidemic, the auditing firm Deloitte said based on a recent survey.

According to the statement, more than half of those surveyed in Hungary, 56%, expect the economy to grow by less than 0.5%.

Looking at sectors, business and professional services firms (minus 86%) and the technology, media and telecommunications industry (minus 73%) were the most pessimistic, but all sectors experienced a decline compared to last year, they said.

The survey revealed that financial executives see falling domestic demand, geopolitical tensions and a shortage of skilled labor as the main risks. The latter has been a major vulnerability for the region for several years, and the expected rise in unemployment does not seem to be solving the labor shortage problem, they added.

Finance executives have also become much more pessimistic about their own companies' prospects, with operating profit expectations falling from 4% in 2022 to minus 17%, the worst figure in ten years since the first such survey was conducted.

According to the survey, two-thirds of financial executives currently expect unemployment to rise, a figure that is high in Hungary compared to the region at 85%. Half of those surveyed said that employment levels at their firms would remain unchanged, and many firms would not turn down expansion even in the current difficult environment.

Deloitte's survey polled the CFOs of more than 600 companies in 15 Central European countries between October and December last year.