Coronavirus: Hungarian economic confidence plummets to 11-year low

Coronavirus causes largest month-by-month drop in economic confidence index

editor: REMIX NEWS
author: MTI

After an already declining trend last month, economic research institute GKI’s confidence index dropped to an 11-year low in April, the think-tank said in its latest survey.

The compounded business and consumer index dropped by 33.1 points from March to April from zero to minus 33.1.

“Although during the global economic crisis, in the first half of 2009, expectations were already much more pessimistic, the GKI economic sentiment index has never fallen by more than 10 points in a single month,” the GKI report said.

“The assessment of the Hungarian economy’s prospects fell to a much greater extent than the assessment of employment, approaching the level typical of the most pessimistic months of 2009. Pessimism of households intensified to the greatest extent in connection with the expected unemployment, and the assessment of the future of the Hungarian economy also worsened dramatically.”

Intentions to raise prices have decreased in all sectors, with the exception of trade, where they remained unchanged, though the share of firms expecting price increases or price reductions went up significantly as well.

At the same time, inflationary expectations by consumers have jumped. In addition, households’ assessment of their own expected financial situation has become significantly more unfavorable.

The fall is largely in line with the overall European picture, where the consumer confidence index dropped to minus 22 points in the whole of the European Union and minus 22.7 points in the eurozone, close to the record lows registered during the 2009 global financial and economic crisis, the Directorate‑General for Economic and Financial Affairs (DG ECFIN) said in its April flash estimate.

It is worth noting that both the GKI and the DG ECFIN confidence indices are compiled using the same methodology of assessing business and consumer confidence.

Title image: Medical and protective equipment is unloaded at the Budapest Airport on Monday, April 28. (MTI/Károly Árvai)

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