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Navigating Economic Crisis: Hungarian Enterprises' Responses and Macroeconomic Trends

Explore the impact of the economic crisis on Hungarian enterprises, with insights from GVI surveys and macroeconomic data. Understand the steps of adaptation and when the crisis might end. Workshop on sentiment indicators held in Budapest. Investigate the performance of the GVI Business Tendency Survey and its predictive power for GDP growth. Identify correlations between GDP growth rate and GVI BCI. Gain insights into the changing business landscape in Hungary and the potential turning point in the economy.

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Navigating Economic Crisis: Hungarian Enterprises' Responses and Macroeconomic Trends

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  1. HCCI Research Institute of Economics and Enterprise The Business Situation the Hungarian Enterprises andTheir Responses to the Economic Crisis Ágnes Makó – Ágnes Czibik – István János Tóth Workshop on Sentiment Indicators andthe Current Crisis Budapest, Lánchíd 19 Design Hotel Monday 9 November 2009 9:00 http://www.gvi.hu/

  2. Topics Macro data  GVI survey  Steps of adaptation  Conclusions Topics • Crisis in Hungary – a brief review • Crisis in Hungary – results of GVI business tendency survey • Steps of adaptation – results of two ad-hoc surveys • Conclusions http://www.gvi.hu/

  3. Topics  Macro data  GVI survey  Steps of adaptation  Conclusions Macroeconomic data – a brief review http://www.gvi.hu/

  4. Topics  Macro data  GVI survey Steps of adaptation  Conclusions GDP growth rate: recession before the crisis • Long recessionperiod before the crisis: 2006.q3 -2007.q4 • World crisis: 2008.q2 – • Dramatic deterioration http://www.gvi.hu/

  5. Topics  Macro data  GVI survey Steps of adaptation  Conclusions GDP growth rate: the German and Hungarian recession link up http://www.gvi.hu/

  6. Topics  Macro data  GVI survey Steps of adaptation  Conclusions Dramatic rise of unemployment from 2008.q4 http://www.gvi.hu/

  7. Topics  Macro data  GVI survey Steps of adaptation  Conclusions Rise in Unemployment: in developed regions • More developed regions, higher growth rate of unemployment • Period of significant rise: from October 2008 to March 2009 higher growth rate lower growth rate http://www.gvi.hu/

  8. Topics  Macro data  GVI survey Steps of adaptation  Conclusions The end of the crisis: When? http://www.gvi.hu/

  9. Topics  Macro data  GVI survey Steps of adaptation  Conclusions The end of the crisis: When? http://www.gvi.hu/

  10. Topics  Macro data  GVI survey Steps of adaptation  Conclusions The end of the crisis: When? http://www.gvi.hu/

  11. Topics  Macro data  GVI survey Steps of adaptation  Conclusions The end of the crisis: When? http://www.gvi.hu/

  12. Topics  Macro data  GVI survey Steps of adaptation  Conclusions The end of the crisis: When? http://www.gvi.hu/

  13. Topics  Macro data  GVI survey Steps of adaptation  Conclusions The end of the crisis: When? http://www.gvi.hu/

  14. Topics  Macro data  GVI survey Steps of adaptation  Conclusions Crisis in Hungary – results of GVI business tendency survey http://www.gvi.hu/

  15. Topics  Macro data  GVI survey Steps of adaptation  Conclusions Definition of GVI BCI GVI BCI = 0,1*UHJ (present business situation) + 0,2*UHV (expected business situation in next 6 months ) + 0,1*VJJ (present financial situation) + 0,2*VJV (expected financial situation in next 6 months) + 0,2*MSV (level of total order books) 0,1*BGV (investments to machines, equipments in next 6 months) 0,1*BEV (investment to real estates in next 6 months) http://www.gvi.hu/

  16. Topics  Macro data  GVI survey Steps of adaptation  Conclusions Survey parameters • Period: 1998- • Survey method: mail survey and CATI • Sample: Hungarian enterprises • Case numbers: 1300-1900 companies • Regularity: twice a year (April and October) • Weighting: by company size (by contribution to the GDP) and regional • Test of homogeneity: identical sample distribution by company size and region • Good predictor for GDP growth rate change • Lead time: cca. 90 days http://www.gvi.hu/

  17. Topics  Macro data  GVI survey Steps of adaptation  Conclusions The performance of theGVI Business Tendency Survey- an illustrative analysis http://www.gvi.hu/

  18. Topics  Macro data  GVI survey Steps of adaptation  Conclusions 1st step: Scatterplot of GDP growth rate and GVI BCI (t=24) • R = 0,891p > 0,000t = 24 • Due to the unit root (cointegration) problem, we have to detrend the time series • Simple method: differencesdT = Ti+1 - Ti http://www.gvi.hu/

  19. Topics  Macro data  GVI survey Steps of adaptation  Conclusions 2nd step: GDP growth rate and GVI BCI (detrended by difference, t=23) • R = 0,583p > 0,003 http://www.gvi.hu/

  20. Topics  Macro data  GVI survey Steps of adaptation  Conclusions Scatterplot of GDP growth rate and GVI BCI (detrended data, t=23) • R2 = 0,34p > 0,000t = 23 • Strong positive relationship • The GVI BCI’s changeis good predictor of the change of GDP growth rate http://www.gvi.hu/

  21. Topics  Macro data  GVI survey Steps of adaptation  Conclusions Toward the turning point? http://www.gvi.hu/

  22. Topics  Macro data  GVI survey Steps of adaptation  Conclusions http://www.gvi.hu/

  23. Topics  Macro data  GVI survey Steps of adaptation  Conclusions http://www.gvi.hu/

  24. Topics  Macro data  GVI survey Steps of adaptation  Conclusions http://www.gvi.hu/

  25. Topics  Macro data  GVI survey Steps of adaptation  Conclusions http://www.gvi.hu/

  26. Topics  Macro data  GVI survey Steps of adaptation  Conclusions http://www.gvi.hu/

  27. Topics  Macro data  GVI survey Steps of adaptation  Conclusions http://www.gvi.hu/

  28. Topics  Macro data  GVI survey Steps of adaptation  Conclusions http://www.gvi.hu/

  29. Topics  Macro data  GVI survey Steps of adaptation  Conclusions turning point in the crisis in Hungary ? http://www.gvi.hu/

  30. Topics  Macro data  GVI survey Steps of adaptation  Conclusions http://www.gvi.hu/

  31. Topics  Macro data  GVI survey  Steps of adaptation  Conclusions Steps of adaptation – results of two ad-hoc surveys http://www.gvi.hu/

  32. Survey parameters Period: March and June 2009 Survey method: CATI Sample: Hungarian enterprises, quota sampling by bank loans Case numbers: 314 companies in March, 302 companies in June. Panel database: N=258 Test of homogeneity: identical sample distribution by company size and sectors Topics  Macro data  GVI survey  Steps of adaptation  Conclusions http://www.gvi.hu/ 32

  33. Topics  Macro data  GVI survey  Steps of adaptation  Conclusions Results http://www.gvi.hu/

  34. Drop in domestic sales Topics  Macro data  GVI survey  Steps of adaptation  Conclusions 2014.11.05. 19:36 • Decrease of sales in construction and in the processing industry • Governmental spending-cut measures, fall of governmental investments http://www.gvi.hu/ 34

  35. Improving expectations of large companies Topics  Macro data  GVI survey  Steps of adaptation  Conclusions • Progressing expectations of the largest companies • Dual economy in Hungary: efficiency – large company size, foreign ownership, production for export markets 2014.11.05. 19:36 http://www.gvi.hu/ 35

  36. Improving business climate in Germany Topics  Macro data  GVI survey  Steps of adaptation  Conclusions • Ifo: improving business climate for 4 months • Expanding export opportunities • Hungarian export headed to Germany: 28.4% (2007); 26.6% (2008) 2014.11.05. 19:36 http://www.gvi.hu/ 36

  37. Panel data – classification of change Topics  Macro data  GVI survey  Steps of adaptation  Conclusions 2014.11.05. 19:36 http://www.gvi.hu/ 37

  38. Topics  Macro data  GVI survey  Steps of adaptation  Conclusions Companies with loans vs. without loans http://www.gvi.hu/

  39. Progressing expectations of companies with loans Topics  Macro data  GVI survey  Steps of adaptation  Conclusions • Raising loans –improving expectations • Restoration of the loan market situation – recovery of the real economy 2014.11.05. 19:36 http://www.gvi.hu/ 39

  40. Topics  Macro data  GVI survey  Steps of adaptation  Conclusions Applied crisis management measures 2014.11.05. 19:36 http://www.gvi.hu/ 40

  41. Applied crisis management measures I. Topics  Macro data  GVI survey  Steps of adaptation  Conclusions • Rapid reaction to the crisis • Several different measures • Shorter working hours at 19% • Workforce cut at 42% of the companies 2014.11.05. 19:36 http://www.gvi.hu/ 41

  42. Applied crisis management measures II. Topics  Macro data  GVI survey  Steps of adaptation  Conclusions • Reducing costs is prevailing • Searching for new markets: 82% • Postpone the shrinking of the company 2014.11.05. 19:36 http://www.gvi.hu/ 42

  43. Searching for new markets Topics  Macro data  GVI survey  Steps of adaptation  Conclusions • Active and "expansionist" reaction at companies with export sales • Appearance of the dual economy 2014.11.05. 19:36 http://www.gvi.hu/ 43

  44. Part-time working hours by exports Topics  Macro data  GVI survey  Steps of adaptation  Conclusions • Part-time working hours at companies with export sales • Non-typical form of employment in Hungary http://www.gvi.hu/ 44

  45. Part-time working hours by company size Topics  Macro data  GVI survey  Steps of adaptation  Conclusions • Diminishing labor force demand • Rising unemployment 2014.11.05. 19:36 http://www.gvi.hu/ 45

  46. Dismissal and part-time work Topics  Macro data  GVI survey  Steps of adaptation  Conclusions • Workforce cut and part-time work – complementary crisis management measures • Enterprises in unfavorable business situation apply several methods 2014.11.05. 19:36 http://www.gvi.hu/ 46

  47. New long-term plans by foreign ownership Topics  Macro data  GVI survey  Steps of adaptation  Conclusions • Long-term planning at companies with foreign ownership • A different business mentality? 2014.11.05. 19:36 http://www.gvi.hu/ 47

  48. Conclusions Rapid reaction with diverse measures Unfavorable situation – parallel application of several measures More efficient companies are more efficient in self-protection Recovery of loan markets supports real economy Slight improvement in expectations - toward the turning point? The end of the crisis is cannot be seen yet Topics  Macro data  GVI survey  Steps of adaptation  Conclusions 2014.11.05. 19:36 http://www.gvi.hu/ 48

  49. Topics  Macro data  GVI survey  Steps of adaptation  Conclusions Thank you for your attention!You can download this presentation from the GVI website from November 12 2009http://www.gvi.hu/ http://www.gvi.hu/

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