Hungary Economic Sentiment


Hungary: Business confidence rises to highest level in almost 10 years

January 24, 2011

In January, the economic sentiment index produced by the Hungarian Economic Research Institute (GKI, Magyar Gazdasagkutato Intezet) rose a full percentage point to minus 6.3 points, which marked the highest level since April 2006. The increase was due to improved businesses confidence, which reflects recovering external demand amid stronger-than-expected growth in Western Europe. In contrast, consumer sentiment decreased for the third consecutive month. Business sentiment increased to plus 0.5 points, which represented the highest reading in nearly a decade. According to GKI, expectations were higher in all sectors compared to December, although the increase was most evident in trade and in services. In addition, the economic outlook improved, as industry and services were slightly more optimistic than last month, while the construction sector was more pessimistic. Meanwhile, consumer confidence dropped for the third month in a row to minus 25.8 points. The number of households planning to purchase major durable consumer goods declined, reflecting a worse assessment of their own current financial situation as well as increased fears of unemployment. However, respondents were more optimistic about the outlook for the overall economy and expect the economy to continue improving in the future.


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