Ecostat's SME confidence index slipped to 47.2% in June from 51% in May, showing growing pessimism.
Ecostat said the prospect of higher taxes and domestic energy prices from the autumn along with a fall in real wages outweighed any global economic improvements in SMEs' assessment. Ecostat's SME confidence index averaged 49.3% in the second quarter of 2006, the same as the average in the first quarter. One-fifth of SMEs said the domestic market would contract in the coming months, citing falling wages and increasing inflation. Just 27% said their output would expand, compared to 46% in May.
SMEs have a more favorable outlook, however, for exports: 29% said foreign demand for Hungarian products will grow because of the weakening forint. Just 37% of SMEs said they planned investments, the lowest ratio in two years. Ecostat attributed the fall to uncertain demand and financing difficulties.
SME managers put annual average inflation at 4% in June, as against 4.6% in May.