According to the survey conducted by Századvég Konjunktúrakutató in March 2022, the sense of prosperity of households and businesses deteriorated: on a scale between -100 and +100, the value of prosperity index decreased from -1.9 to -4.8 regarding households, while it decreased from +0.5 to -5.1 regarding businesses. The survey was conducted in the first half of March, so the uncertainty caused by the war in the neighbouring country determined the development of this month’s data. This is also shown by the fact that while in the case of the population the score calculated from questions about the past increased from the previous month’s -14.1 to -10.6, the score of the questions on the future fell from +0.1 to -10.4. A similar process can be seen in the case of the business survey: the value of the index calculated from questions about the past increased from -3.1 to -1.5, while that of the future decreased from +3.1 to -8.2. However, it is important to emphasise that, despite the war, the sense of prosperity in March is more favourable than the values in the first three waves of the coronavirus.
Uncertainty caused by the Russian-Ukrainian war is reflected in prosperity indices
Three sub-indices of the four prosperity indices deteriorated, with only the perception of the employment situation showing an increase, which is still positive with a value of +10.6 points. The perception of the financial situation changed slightly, from -0.1 to -2.8. Of the four sub-indices, respondents still see inflation as the most unfavourable, in line with macroeconomic data, its sub-index was -70.4 compared to the previous month’s -63.1. The perception of the economic environment reached -2.6 points in February, but only -8.8 points in March due to the effects of the acts of war.
The effects of the war affected the economic expectations for the next twelve months the most. The proportion of those who think the country’s economic situation is significantly deteriorating rose from 10.8 percent in February to 21.9 percent, while the proportion of those who think it is slightly deteriorating rose from 13.8 percent to 18.2 percent. The proportion of those expecting it to remain unchanged was 14.8 percent compared to the previous month’s 19.6 percent. The proportion of those expecting a slight improvement in the situation is 15.8 percent compared to 26.4 percent, while a significant improvement is expected by 9.7 percent compared to 12.3 percent. The population’s sense of uncertainty is indicated by the fact that a significant part of respondents, about one-fifth, could not or did not want to answer the question.
At the same time, the perception of the quality of public services improved. While in February a proportion of 16.0 percent said their standards significantly deteriorated in the past twelve months and 15.0 percent said their standards slightly deteriorated, these two rates fell to 13.1 percent and 12.3 percent in March, respectively. The proportion of those experiencing a slight improvement increased from 19.3 percent to 20.2 percent, while that of those who reported a significant improvement increased from 7.0 percent to 11.1 percent.
According to the result of the corporate survey, all four sub-indices decreased: the perception of the economic environment decreased from -1.9 percent to -14.0, the sectoral environment remained in the positive range, it decreased from +16.2 to +6.4, the production environment decreased from -1.4 to -4.5, while the business environment decreased from +1.2 to -2.3.
Similar to the household survey, the biggest deterioration in corporate issues was in the perception of the economic situation in the next twelve months. A proportion of 20.4 percent expected a significant deterioration in March compared to 6.8 percent in February, while a proportion of 24.8 percent expected a slight deterioration compared to 19.9 percent in the previous month. The proportion of those expecting it to remain unchanged barely changed, it was 24.0 percent in March. The proportion of those expecting a slight improvement decreased by half to 15.0 percent, while the proportion of those indicating a significant improvement fell from 6.5 percent to 4.3 percent.
The feeling that the international situation is becoming unpredictable is indicated by the fact that the war had an impact not only on the expected development of economic processes but also on expectations regarding competitiveness. The proportion of those expecting a significant deterioration in competitiveness over the next twelve months increased from 2.8 percent in February to 11.1 percent, while 21.4 percent opted for a slight deterioration compared to 15.0 percent. The proportion of those expecting competitiveness to remain unchanged barely changed, it was 32.2 percent. The proportion of those expecting a slight improvement fell from 33.3 percent to 20.9 percent, while that of those expecting a significant improvement decreased from 6.4 percent to 4.8 percent.
About the prosperity index
The task of the prosperity research conducted by the Századvég Konjunktúrakutató Zrt. is to provide decision makers and analysts with information about the current and expected processes of the economy in the near future. Our institute has been compiling corporate and household prosperity indices on a monthly basis since August 2019. In our monthly survey, we ask 1,000 company executives and 1,000 adult residents about their perception of the economic situation and their expectations thereof. Regarding the two groups, we ask 29 and 28 questions, respectively, which cover a wide range of economic life. Of the responses, positive ones (e.g., expected improvement in the economic situation) receive positive scores, while negative ones (expected decline in employment) receive negative scores. Then, by averaging the scores and converting them to a scale between -100 and +100, the prosperity indices are obtained. Thus, the higher the value of the prosperity indices, the more favourable the processes in the economy are for households and companies. In addition, regarding both household and corporate surveys, we also prepare 4 sub-indices for each by using some of the questions, which illustrate the development of economic well-being in an area.