Hungary struggles with record number of shop closures
Hungary is witnessing a significant economic downturn, marked by a staggering number of shop closures due to financial challenges. Recent data from the Hungarian Central Statistical Office (KSH) reveals a record-breaking number of shop closures, portraying a concerning economic scenario.
Rising bankruptcies
Nearly 4,600 shops closed for good within the first half of 2023, Portfolio reports. This alarming trend is primarily attributed to a combination of factors, including a price freeze and a decline in purchasing power. The KSH data reveals a stark reality, with 4,583 shops shutting their doors by mid-year. Notably, this represents twice the number of closures compared to the same period in the previous year. The total number of operating stores in Hungary now stands at just over 110,000, marking a record low for the country’s retail landscape.
Analyst insights
Attila Bíró, an industry analyst from Pénzcentrum, shed light on the challenging situation faced by retailers. He highlighted that the price freeze allowed consumers to purchase products at artificially low prices, putting a strain on businesses. While this situation was temporarily sustainable, the prolonged duration of the price freeze became a burden that many shops could not endure.
An outlook for shop closures
The analyst further warned that if the current trend persists, the number of shop closures could reach a staggering 10,000 by the end of the year. The economic challenges, exacerbated by factors like inflation, have created a precarious environment for businesses, especially smaller retail units.
Inflation and increased costs
Despite a slight drop in inflation below 10% in October, Eurostat data reveals that Hungary experienced the most significant monetary deterioration in the European Union. László Molnár, CEO of GKI, emphasised that any measures increasing costs, such as an accelerated minimum wage hike, impose a substantial burden on smaller retail establishments. This added financial pressure diminishes the likelihood of these businesses considering price reductions.
As Hungary grapples with a surge in bankruptcies and a record number of shop closures, the economic landscape faces unprecedented challenges. However, it is not only the retail sector that is suffering, but the restaurant industry also has to face another year of uncertainty.
Source: Portfolio
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6 Comments
The should have a small biz dept to help small business with a professional in charge. Everything from design to how to work with customers – something called customer service. The city could use some help itself to make the city more beautiful. You have areas mostly small business and residential and have a cold industrial modern look. Many beautiful buildings with ugly street accessories that are just as important as building. It’s easy to transform a area with less money than it spends now. It’s like wearing torn jeans because it cool. Berlin has graphiti event that attracts people from all over if that’s is your nitch and no worry whose property it is. If you looking for the beer crowd and a place to piss and make them feel at home- Is the way to go.
Add to that consumers spending significantly less and you have a perfect storm. As our Politicians “fight” their culture wars and finding other ways to finance their spending (easy to make entrepreneurs sell at a loss, and blame lack of spend on health and education on the EU not sending money)
It will Worsen, as the economy deepens in it’s fall.
Our large Budapest shopping complexes being in Buda and Pest – plenty empty shops, and very noticeable, visiting different days of week, customer low numbers or non in lots of shops, and plenty of VACANT shops for rent.
We shop broadly at these large complexes, and then the smaller shops – not attached to these large complexes – in the utca’s – there ability to complete in the sickening Hungarian economy, they are are faced with an up-hill battle.
Winter – it will worsen and consumer spending, nothing gets cheaper in Hungary, the inflation factor, not at all under control in Hungary, not a good picture, that will see it all worsen.
With both government and landlords seeking to squeeze more than the average Zsolt can afford, eventually, the wheels have to come off the bus. Policymakers should have to pass System Dynamics 101 and 102 before taking office in Hungary – as all of this was predictable. Of course, the policies implemented 10 years ago don’t immediately change the landscape, that takes years. But think about: 27% VAT and a social service/tax wedge that is over 50%? How much disposable income does that leave for consumers? Zilch. Of course, like the frog in the pot, the effect is slow.
We’re going to see the same thing soon with professionals. We don’t pay teachers nearly enough, and rather than finding ways to fund education, instead, we increase class sizes making it even harder to teach. At the same time, society’s attitude to the teaching profession influences the attitude of the young – and in a few years time, there won’t be enough students to fill college courses in “hungarian” – and a few years later, there won’t be “hungarian speaking” doctors, clinicians, etc.
But hey, look at how pretty the fireworks are August 20th? Ah, hey the BKK is so inexpensive and they can even afford to pay their drivers double what a teacher makes…
The PRIORITIZATION of this Orban Government continues to be appalling.
Go back over 14 years plus, under NEEDS of the people as against wants, the wants of Orban and his “mob” just appalling, placed over the NEEDS of millions of Hungarians.
Education, as an Emeritus Professor at Law, very much my “love child” – what over 14 plus years of Orban and it continues the “raping and pillaging” that he has, besides lie’s of a repetitive nature, he has used or practiced, the impact, through Orban & his Government, no prioritization of funding investment into education being over 14 years plus constantly neglected – the damage, all on the shoulders of Victor Orban, will be lasting,
Appalled.
347,000.00 FT thanks to Soros funded DAs and left wingers in the US -you steal that much – no bale and no charges. You can look for it here if people don’t wake up. Once one of the most beautiful cities in world – San Francisco is victim to this crazy – at the same time they are demanding the police be defunded. All the major cities on the west coast, fueled by drugs and miles of people living on street. The cities and Justise system are run by Soros funded equity hires. The north and south borders are open to anyone wants to come and free transportation to anywhere you want to go.