According to the December 2022 survey of Századvég Konjunktúrakutató, the sense of prosperity of both the populationa and businesses has slightly decreased. On a scale between -100 and +100, the value of prosperity index decreased from -26.4 to -29.9 regarding households, while it decreased from -20.7 to -21.9 regarding businesses. The sense of prosperity index remaining in the negative range is still determined by the higher inflation environment induced by the Russian-Ukrainian war and the uncertainty induced by the economic sanctions. Major turbulances in the financial, foreign exchange, and primarily in the commodity markets have also reinforced uncertainty. The sense of prosperity is possible to significantly improve when the war ends, inflation reduces, the great uncertainty in the energy markets is eliminated, and sustained low prices develop.
In December, the sense of prosperity was mostly determined by the negative effects of the war and the uncertainty in the energy market
Three of the sub-indices of the population’s sense of prosperity have declined compared to those of the previous month, thus, overall, the index has also become less favourable compared to November. The most favourable is still the perception of the employment situation, the value of which has increased from last month’s -12.2 to -11.9. Households have the most negative perception of the inflation processes, the sub-index of which has slightly decreased from -88.5 to -93.0. The perception of the economic environment has decreased from the value of -34.4 to -42.2 compared to last month, while that of the financial situation from -21.3 to -25.0.
When asked whether things are going in the right direction or the wrong direction in Hungary, the population gave more pessimistic answers compared to last month. The response rate of things definitely going in the wrong direction has increased to 42.7 from 32.9 percent in the previous month, while the rate of things rather going in the wrong direction has dropped from 21.4 percent to 20.2 percent. After 27.3 percent in November, 23.1 percent of those surveyed perceived the development of the processes as unchanged, while 8.4 percent (11.1 percent in November) saw the development as rather moving in the right direction, and 4.7 percent (6.1 percent in the previous month) saw the development as definitely moving in the right direction.
The biggest positive shift in the case of the population occurred in the perception of the development of employment over the next 12 months. 4.0 percentage points fewer people expect a significant decrease, while 0.3 percentage points fewer people estimate a slight deterioration, 1.4 percentage points fewer people forecast an unchanged situation, and 2.5 percentage points fewer people expect a slight improvement. Furthermore, 0.6 percentage point more people believe that employment will increase significantly over the next 12 months compared to the data a month ago.
Regarding the corporate survey, the value of two sub-indices have become less favourable compared to last month. The sub-index of the economic environment has decreased from last month’s -37.7 to -41.7, that of the sectoral environment has remained -22.4, that of the production environment has improved from -13.4 to -13.2, while that of the business environment has changed from -30.1 to -33.2.
Companies expect the biggest improvement in the development of export over the next twelve months. On average, 0.2 percent of companies expect a significant growth and 0.2 percent expect a slight growth. A slight weakening is expected by 0.7 percentage point more than forecasted last month. At the same time, in December, 0.2 percent fewer companies predicted a significantly declining export.
Overall, companies are pessimistic about the future. In fact, 34.9 percent of the companies surveyed believe that things are definitely going in the wrong direction (an increase of 3.8 percentage points compared to the previous month). According to another 31.1 percent (3.4 percentage points lower than the November rate), it is rather going in the wrong direction. The category of both was indicated by 2.8 percentage points more companies, the category of rather going in the right direction by 3.3 percentage points fewer companies, and the category of definitely going in the right direction was indicated by 0.3 percentage point more companies as their forecast.
About the prosperity index
The task of the prosperity research conducted by 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, the positive ones (e.g., expected improvement in the economic situation) receive positive scores, while the 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 households and companies perceive the processes in the economy. 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.