Economic Analysis
The sense of prosperity is still affected by the war
According to the June 2022 survey of Századvég Konjunktúrakutató, the sense of prosperity of both the population and businesses has declined: on a scale between -100 and +100, the value of prosperity index decreased from -14.7 to -16.8 regarding households, while it decreased from -14.0 to -19.0 regarding businesses. The decline in the indicators is still caused by the uncertainty induced by the Russian-Ukrainian war and economic sanctions and by the higher volatility in the markets (foreign exchange, money, bond and commodity markets). The sense of prosperity is possible to improve when the war ends, the uncertainty in the energy markets is eliminated, and lower prices develop.
The sense of prosperity is still determined by war and sanctions
According to the June 2022 survey of Századvég Konjunktúrakutató, the sense of prosperity of both the population and businesses has declined. Compared to the previous month, the rate of change has now been bigger for companies, meaning that business leaders are also beginning to feel the effects of war and sanctions. This is mainly reflected in the case of households, while rising energy prices, weak forint exchange rate, and the fragmentation of supply chains are a problem for businesses. On a scale between -100 and +100, the value of prosperity index decreased from -13.3 to -14.7 regarding households, while it decreased from -8.7 to -14.0 regarding businesses. The end of war and the elimination of the risk associated with sanctions, which are harmful to the economy, as well as the strengthening of the forint, thus normalising inflation, are required to improve the sense of prosperity.
Intensified insecurities caused by the war has a greater impact on the sense of prosperity of households than of companies
According to the survey conducted by Századvég Konjunktúrakutató in May 2022, the sense of prosperity of both households and businesses became moderate: on a scale between -100 and +100, the value of prosperity index decreased from -7.5 to -13.3 regarding households, while it decreased from -6.8 to -8.7 regarding businesses. The decline in the indicators is still explained by the Russian-Ukrainian war, but the sanctions already imposed and the floating of the sanctions regarding the ban on energy imports also play a significant role. An improvement in the sense of prosperity is expected when the war and the floating of sanctions jeopardising the functioning of the Hungarian economy end.
Political Analysis
