Hungary enterprise confidence sinks to 50-month-low in January, GKI survey reveals

BUDAPEST (Reuters) – Hungarian enterprise confidence fell in January to lows final seen through the COVID-19 pandemic, financial assume tank GKI mentioned on Thursday, weighed down by deteriorating prospects in retail and providers.

The findings of the survey, which focuses totally on small enterprise expectations, belies the optimism inside Prime Minister Viktor Orban’s cupboard that Hungary’s financial system is about for a pointy rebound in 2025 after two years of near-stagnation.

Orban, who faces an election in early 2026, expects Hungary’s financial system to develop by 3.4% this 12 months in contrast with the European Fee’s 1.8% forecast and GKI’s 2.5% projection issued in December, which the think-tank says now appears to be like considerably optimistic.

GKI’s enterprise confidence indicator dropped to -13.9 in January, easing inside the margin of error, however nonetheless hitting its lowest level since November 2020, as all subcomponents of the index remained within the purple, economist Raymund Petz mentioned.

He mentioned the enterprise confidence indicator had been a reasonably good predictor of quarterly financial development in previous years and, barring any main upswing within the coming months, it signalled continued weak point for the primary quarter.

“These figures point out that fourth-quarter GDP is prone to be poor, with negligible development. Barring a rebound in February, a sea change within the first quarter is unlikely,” he mentioned.

Shopper sentiment additionally deteriorated in January, with Hungarians turning extra pessimistic about their monetary prospects and the outlook for the broader financial system over the subsequent 12 months, the survey confirmed.

Hungary’s financial system, which is among the many most export-reliant within the European Union, is battling weak demand within the euro zone, its predominant buying and selling accomplice. Any U.S. tariffs on European imports, particularly automobiles, might additional crimp development.

Orban is banking on an financial rebound fuelled by wage and pension rises, elevated tax rebates for households, a capital injection for small companies and a housing stimulus.

Nevertheless, in the meanwhile, small companies see no main enchancment of their prospects, Petz mentioned, with expectations amongst retailers regularly deteriorating over latest months.