K&H Bank's SME confidence index rose for the second quarter in a row in Q2, climbing 6 points to -28, the bank said on Thursday.
SMEs' sentiment was helped by the expected effects of economic policy measures and an improved outlook for corporate lending conditions, K&H Bank said. SME’s reported a worsening outlook for their customer base, competitiveness and the availability of EU funding.
About 41% of SME’s said the forint's exchange rate would stabilize, while 33% said it would weaken. A majority of companies that expect a stable forint has not bee seen in many quarters, K&H Bank said.
The companies' assessment on prospects improved as they counted on 2.3% revenue growth, on average, but a 0.2% fall in profits.
Many companies said they would cut back on investments because of the meager revenue growth. Only 59% of companies said they planned investments in the coming year, down from 62% in Q1 and the lowest figure in five years. Just 4% of SME’s said they would raise prices over the rate of inflation.
The outlook improved for SME’s in the trade, services and industrial sectors, but worsened in the farm sector. The measure of confidence in the farm sector dropped to -18 from -8 in Q2.
K&H Bank has prepared its SME confidence index with market research company GfK Hungária since 2004. The index is based on a survey of 700 companies based in Hungary and having sales below HUF 1 billion. (MTI-ECONEWS)