Economy Reopening as Epidemic Comes to an End

Despite the rosy appraisal of the current standings, analysts surveyed from banks Erste and CIB warn the economic downturn may be at its most severe in the second quarter. Indeed, the economic impact of the epidemic is becoming increasingly clear.

About 73,000 people lost their jobs in April, 54,000 of whom became economically inactive and 19,000 unemployed, according to the Central Statistical Office (KSH); 5,254 of the total were made redundant in group layoffs according to the National Employment Service (NFSZ).

In the previous month, when the stay at home restrictions were introduced, 1,098 people were laid off in this way, compared with 363 in February. In previous years, the average monthly data only fluctuated around 300-400.

According to a 15,000-participant survey from BÁV Zálog, 80% have a job, but due to the epidemic, 5% are on unpaid leave, 30% are employed on reduced hours, and 35% work the same number of hours for reduced wages. Some 60% of respondents expect their revenue to decline in the near future, of which 38% expect a small decline, while 22% expect something more severe.

Recent data from Bisnode suggests that the number and value of invoices issued by domestic companies fell sharply in the first quarter of this year compared to the same period last year.

Crisis or Opportunity?

Elsewhere, half of Hungarian SMEs said they were moderately affected by the coronavirus, while 44% were heavily affected, according to a survey conducted among K&H’s customers in mid-April. More than 60% of them have introduced austerity measures to mitigate the damage, and a third of companies have enough financial reserves for just a month or two. However, according to another survey from Stylers, 50% of domestic companies are not affected at all or only slightly by the crisis, and a fifth look at it specifically as an opportunity.

Even as the situation alleviates, companies are still doing what they can to support the healthcare system. IKEA Hungary donated furniture to departments of Szt. János Hospital that were declared epidemic centers and the Department of Internal Medicine and Hematology at Semmelweis University, in addition to donating toys to the Pál Heim National Institute of Pediatrics, Bethesda Children’s Hospital and the Clinic of Anesthesiology and Intensive Care at Semmelweis University, according to Forbes.hu.

To support the daily lives of ambulance staff and their families, Auchan handed over 10 million trust points, worth HUF 5 million, to the National Ambulance Service (OMSZ), who were also supported in their supply of oxygen for their vehicles by Linde Gáz Magyarország Zrt. Indotek Group, meanwhile, has launched a campaign in which it will distribute nearly 50,000 masks at the 17 malls it has reopened nationwide.

With recovery in sight, the government made a significant effort to boost domestic tourism, it being one of the primary sectors affected by the downturn. A combined HUF 150 billion of funding through various programs is being provided to support investments in the tourism sector, the head of the Hungarian Tourism Agency (MTÜ) Zoltán Guller told state news agency MTI.

Hunguest Hotels has already received a total of HUF 17 bln from the fund with which it will develop 14 hotels. Private accommodation establishments in Hévíz (190 km southwest of Budapest) could receive a total of about HUF 1.3 bln. Apart from mere support, this investment is well-founded as Hungarian holiday makers are much more likely to travel to domestic destinations than spend time on a beach in other countries this year, according to a Lounge Group survey commissioned by the MTÜ.