Hungarian businesses may close if the situation does not take a drastic turn
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The head of one of Hungary’s largest business associations expects a stormy economic year in 2023. The outlook for the beginning of the year in particular is uncertain. Increased energy prices may fully absorb by then, while demand is expected to further decline. As a result, many businesses may close down, restructure their entity, or shut down unprofitable divisions.
Tough times ahead
Based on the general business sentiment indexes, optimism was not a characteristic trait among enterprises towards the end of 2022, László Perlusz, Secretary General of the National Association of Entrepreneurs and Employers told Portfolio.hu. He pointed out:
“There are many sectors and professions where the agenda is not about business planning for the next year, but about dissolution.”
This is the case for several tourism and catering companies, many service sector businesses and energy-consuming industries, said Perlusz, mentioning also chemical and steel industries.
This current energy crisis is triggering a change in companies to move towards more sustainable business models. Hungarian small and medium-sized enterprises are more vulnerable, but they can be adaptive, so we can expect major changes in the market, he said. Many companies will close down or restructure, change their profile or get rid of unprofitable businesses and adopt sustainable technologies, which could mean job cuts.
“Therefore, it is extremely important to maintain the subsidised programmes that encourage this progress and modernisation. The low, fixed 5 percent interest loan products in the Széchenyi Card Programme and MFB or Eximbank are just some examples,” said László Perlusz, speaking in favour of state support.
Inflation remains high
The first quarter of 2023 could be crucial, according to the secretary-general of the advocacy organisation. Perlusz believes that if the Russian-Ukrainian war escalates further, it will have again a negative impact regarding European economies.
The confederation currently expects inflation to remain persistently high. After peaking at around 25 percent at the beginning of the year, a noticeable decline is projected, if the war does not exacerbate supply chain issues and food shortages. Therefore, the evolution of the consumer price index will be “reversed” compared to 2022. Prices could fall below 10 percent by the end of the third quarter and the beginning of the fourth quarter.
