Magazine: Economic Year Starter 2019: Risks, a new era and SMEs

At the end of January the ‘Economic Year Starter 2019 – The Limits of the Booming Economy’ conference was held in Budapest.

Péter Banai
state secretary felelős
Ministry of Finance

Péter Banai, state secretary at the Ministry of Finance told that the Hungarian economy had grown by 4-4.5 percent in 2018, which was one of the fastest growth rates in Europe. What is more, the government deficit has been decreasing since 2012 and the government debt has reduced too.

No less than 120 SMEs sent their representatives to the conference, where the state secretary stressed: the government has managed to improve the employment rate, which used to be rather bad even at EU level. The number of those who are employed has grown by 700,000 since 2010. Mr Banai added that it would be important to increase the productivity of SMEs if Hungary wants to stay on a growth path e.g. by reducing their administrative burden.

Balázs Szepesi
deputy state secretary
Ministry for Innovation
and Technology

Balázs Szepesi, deputy state secretary at the Ministry for Innovation and Technology opined: entrepreneurs could feel their situation improving last year, and he recommended them to invest their profits in development. He warned that cheap labour isn’t available to businesses any more – now SMEs have to earn the money for raising wages by 10, 20 ore 30 percent themselves. The deputy state secretary also called attention to the fact that with the monetary environment changing, the era of cheap loans is going to end. Another factor that marks the start of a new era is the digitalisation process.

A roundtable discussion followed, where the first question was: Do businesses take out too many loans? Zsombor Essősy, CEO of MAPI Magyar Fejlesztési Iroda Zrt. answered the question first, who told that there is an abundance of funding opportunities available, including the EU sources – the most important thing is to use these well. László Krisán, CEO of KAVOSZ Zrt. said that from the 1.2 million Hungarian SMEs only 300,000-400,000 are eligible for loans from the banks’ perspective. Dr Adrienn Berta, managing director of Magyar Fejlesztési Bank reacted to this by saying: they see that enterprises are ready to take out loans, but risks must be managed and her bank is looking for ways to do this. István Szabó, deputy CEO of Exim Bank told: banks have already lent about HUF 7,300 billion to enterprises so far, but the economy could do with more and the banking system would be able to grant more loans, too. Levente Szabó, deputy CEO of Takarékbank Zrt. reckoned that it is an important factor that some businesses are afraid of banks, because they audit those firms apply for loans; in his view this kind of cooperation needs to be learned.

After the roundtable discussion the next speaker was Dr Éva Búza, CEO of Garantiqa Hitelgarancia Zrt. Her view of the situation is that there is great demand for funding in the SME sector; this is well indicated by the fact that in the 3rd quarter of 2018 the volume of loans taken out by SMEs increased by 14 percent. Last year the company gave guarantees to enterprises in the value of nearly HUF 150 billion.

There was another roundtable discussion, about the effects of digitalisation on the economy. Levente Jánoskuti, senior partner of McKinsey revealed: a recent study by the company has found that Hungary’s GDP would increase by approximately HUF 3,000 billion if the digitalisation process sped up successfully. Tamás Sőrés, government relations director of Microsoft Magyarország reported that Poland is 1-1.5 years ahead of us in this respect, while in the domain of e-commerce Germany, the Czech Republic and Romania are leading the way. Péter Rehus, country leader of IBM Magyarország called attention to the fact that introducing e-commerce systems is costly, and these investments return sooner in Poland because the market is bigger.

In the roundtable discussion about the supplier capabilities of Hungarian SMEs Gyula Pomázi, deputy state secretary of Ministry for Innovation and Technology told: the government started the Supplier Development Programme in 2017 in order to make as many enterprises as possible capable of supplying large multinational and Hungarian companies with products and services. Ferenc Pongrácz, general manager of innovation at Tungsram highlighted the fact that there are Hungarian enterprises which are able to manufacture innovative products with great added value. //