MFB INDICATOR Spring 2012

The spring 2012 findings of the MFB INDICATOR survey show signs of accommodation by Hungary’s corporate sector to a protracted crisis and to stagnating domestic demand coupled with the inferior driving force of foreign demand. Unchanged below 50 points (on a scale of 0 to 100), the value of the MFB INDICATOR confirms that businesses hold a rather unfavourable view of both the current status and the future tendencies of the Hungarian economy.

 

 

MFB-INDICATOR and component indices

 

MFB INDICATOR

MACROECONOMIC

MARKET

Domestic

Foreign

INVESTMENT

FINANCING

Spring 2012

45.1

38.9

44.4

47.2

51.9

47.5

49.8

Autumn 2011

45.4

43.1

45.4

46.9

56.4

44.7

44.7

Spring 2011

55.2

48.6

54.1

54.2

61.8

55.0

55.0

Summer 2010

47.1

41.5

43.7

43.9

46.6

49.1

49.1

Winter 2009

43.9

31.8

40.3

43.5

45.5

49.8

49.8

Summer 2009

37.3

20.6

35.7

39.2

39.7

50.6

50.6

 

 

 

The decrease (by -0.3 points) of the MFB-INDICATOR since the previous survey stems from an uninterrupted negative impression entertained by companies of the macroeconomic environment. Nevertheless, the market impact of this negative sentiment was somewhat constrained compared to earlier surveys and was expressed by reduced export demand. Although the status of financing and investments has improved slightly, both values are still below 50 points, indicating that companies adopt wait-and-see attitudes and postpone both fund raising and developments.

The findings of the spring 2012 survey demonstrate that the business environment has continued to deteriorate: the Macroeconomic Index dropped below 40 points (38.9) yet again, showing that the macroeconomic conditions continue to stifle corporate activity. The companies responding to the survey reckon the upcoming 12 months will bring slower GDP growth (0.9%) and higher inflation (6.1%) than in spring or autumn 2011 (i.e. companies see the long-term risk of a protracted period of stagflation). (See pages 3-4 for details.)

The value of the Market Index (44.4) continued to drop moderately, while the difference between external and internal processes diminished for the first time in the history of the survey. That was, however, due first of all to the weakening driving force of foreign markets and to a lesser extent to the stabilisation or halting decline of the status of the domestic market (yet exports remained a key component of profitable corporate operations). (See pages 5-6 for details.)

The rating of the investment climate (Investment Index: 47.5) shows signs of consolidation after a sharp decline six months ago. The minor improvement since autumn 2011, however, should not be interpreted as a sign of great momentum in investments as companies tend to hold back their horses. One of the major contributors to retracted investments is the high level of companies with capacity surpluses, which is unprecedented in the history of the MFB INDICATOR. (See pages 9-10 for details.)

The value of the Financing Index (49.8) shows slight consolidation after plummeting six months ago, but besides the modest increase of demand for resources and the slightly improving view of lending conditions an increasingly marked split of the corporate sector can be observed. One group of companies is more and more prepared for operating without credit, while  another major segment of companies is shifting towards deepening desperation.