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In an upturn, bigger players find their feet first; then come SMEs. Two-thirds of the latter experienced more than 10% drop in demand during the crisis.

Small and medium-sized enterprises are more sensitive to the boom and bust cycle, therefore more are affected by crises than their bigger counterparts. However, the recent Navigator study by IFUA Horváth & Partners also points out that the upturn affects them in reverse order: bigger players recover first, and smaller ones only after them.

In the recent study conducted with the collaboration of Budapest Corvinus University among large and medium-sized companies in Hungary, four out of five companies reported a drop in orders: in 2009, only half of them had a decrease in demand and revenues. Analyzing the expectations of companies of varying size, 25% of large enterprises said they will get over the crisis in half a year while in the case of smaller companies this ratio is a lot lower.

When demand picks up again and at least one or two quarters' worth of results support the increase in production, that is when the increase in orders at SME suppliers occurs. “Those of them that have the resources to meet this demand can pass by some of their competitors that cannot buy the necessary amount of raw material to boost activities,” Viktória Bodnár of IFUA Horváth & Partners said.

Nonetheless, exporting SMEs are still in a more favorable position than those that only serve domestic demand, because it shows no growth for the time being and local projections are uncertain, a study by K&H Bank shows. Export-import companies are indeed more likely to expect an improvement of their financials.

But since the foreign trade activities of Hungarian micro-, small and medium-sized enterprises are not that significant, giving only 18% of total exports, only an increase in domestic demand would mean a real upturn. However, there are no structural signs pointing to this happening – only the approaching holiday season could bring a temporary upsurge. (Anikó Jóri-Molnár)