Hungary: Stronger business confidence supports economic sentiment
December 20, 2010
In December, the economic sentiment index produced by the Hungarian Economic Research Institute (GKI, Magyar Gazdasagkutato Intezet) was unchanged over the previous month at minus 7.3 points, which represents the highest level recorded since May 2006. While business confidence was stronger, driven by a recovery in the external sector, this was offset by weaker consumer sentiment. Business sentiment improved to minus 1.4 points, which represents the most positive reading since April 2001. According to GKI, expectations in both industry and trade rose over the previous month. In particular, the industrial sector was more upbeat regarding its stock of orders as well their production levels. Declines in confidence were only seen in construction, which continues to experience sustained pessimism. Meanwhile, consumer confidence dropped markedly from minus 20.8 points tallied in November to minus 24.1 points. Respondents were less optimistic regarding the outlook for the overall economy as well as their own households' current financial situation and their ability to save over the next twelve months.