Are you sure?

German firms’ assessment of economy good, but outlook worsens

The “vast majority” of German-owned companies in Hungary gave a positive evaluation of their own business, as well as of the state of the local economy, in an annual survey conducted by the German-Hungarian Chamber of Industry and Commerce (DUIHK). Firms were less sanguine about the future outlook, however.   

A little more than one-third of chamber members say they expect their business in Hungary to do better, while one-sixth see it doing worse, according to the findings of the survey presented on Monday.

In relation to the outlook for the national economy, the balance between membersʼ “better” and “worse” answers is negative for the first time since 2013.

One in three German companies plan new hires, down from over half a year earlier. About 40% want to invest more than in 2018, while one-sixth plan to scale back investments.

The chamberʼs investment climate index has fallen to 15 points, from 28 points a year earlier; however, 82% of companies say they stand by their earlier investment decisions in the country and would do the same today.

The survey reveals that securing qualified labor in Hungary remains one of businessesʼ biggest challenges. Still more than two-thirds of company leaders surveyed point to the unsufficient supply of skilled labor, which exercices pressure on labor costs as well.

DUIHK President Dale A. Martin, who is also president and CEO of Siemens Zrt., was cited in a press release as saying that there are currently a great many uncertain factors in the global economy which foreshadow more difficult economic circumstances ahead.

“Itʼs good news that, despite the less favorable economic prospects, there are still more companies planning to expand headcount and investments than those planning to downsize or reduce development expenditures,” he added.

On the question of which country German company leaders see as the most attractive for investment in the region, Hungary was pipped to the top of the list by Slovakia in the local survey. Based on a broader survey conducted in 15 countries of the region, and coordinated from Budapest, Estonia emerged as the most attractive destination for the first time this year, pushing long-time leader the Czech Republic into second place, with Hungary moving up one place ahead of Romania to 9th among a list of 20 countries.

The DUIHK has conducted its survey of German companies since 1994. This year a total of 232 company leaders took part, completing the questionnaire between February 1 and March 8.

Established in 1993, the DUIHK has some 900 member companies, and describes itself as the countryʼs largest bilateral association of companies, its most important task being to promote economic ties between Hungary and Germany.

The full survey can be downloaded here in Hungarian, with an executive summary in German viewable here.