Hungary: Economic sentiment weakens at the start of 2019
The GKI economic sentiment index, a composite indicator, dropped to 7.1 points in January from 8.6 points in December. The decrease reflected a decline in both business and consumer confidence.
The business sentiment component of the index fell to 13.9 points in January from 15.4 points in December on the back of softer optimism in the industrial and construction sectors. Confidence in the trade and services sectors, on the other hand, rose. Weaker confidence in the industrial sector was caused by worse assessments of production levels, production prospects and stocks of orders. Meanwhile, confidence in the construction sector dropped due to a deterioration in the assessments of production. Conversely, sentiment in the services sector gained ground on better sales expectations, and confidence in the trade sector increased on the back of better assessments on sales positions.
Looking at the different subcomponents of the business sentiment survey, intentions to hire weakened in all sectors, while intentions to raise prices declined in all sectors expect industry. Lastly, views on Hungary’s economic outlook worsened in all industries, as they did among consumers.
Meanwhile, consumer confidence declined in January, with the index decreasing to minus 12.1 points from minus 10.6 points in the preceding month. The drop reflected households’ less favorable views on their financial position and saving capacities, while they showed greater willingness to purchase high-value durables.