Low-budget flight in turbulence

This article is available for reading in Trade magazin 2025/11.

Tibor Bodor
head of corporate
division
K&H Bank

“This isn’t the bank’s opinion, but that of our customers. They tell us how they see their own situation and how they assess the state of the Hungarian economy”, he explained. According to K&H’s surveys, at the end of 2024 companies were more pessimistic about their situation than they had been a year earlier. Business confidence simply ran out: there was no external shock or regulatory change, yet everyone became more cautious. This mood hasn’t changed significantly since then.

A dual picture: SMEs and large companies

Data say the confidence index of SMEs is steadily declining, while that of large companies is more stable, although not particularly optimistic. Smaller firms are way more sensitive to fluctuations in the domestic economy, while corporations can more easily turn to export markets. SMEs are much more dependent on the Hungarian market, explained Tibor Bodor. As regards sectors, services are showing the most positive picture, while industry has been weakening steadily for two years; the decline in production is also dragging down investment. Consumption is slowly picking up, but this isn’t enough to restart production. Online commerce has also failed to meet post-Covid expectations: more than half of Hungarian shoppers spend their money in foreign web stores. The food industry and agriculture feature prominently in K&H’s portfolio. Although lending to the food industry has decreased – from HUF 721bn to HUF 700bn – the bank expects that funds from the second pillar of the CAP Strategic Plans would bring new momentum in 2025.

Investment programmes: opportunity and distortion

The government has launched several programmes to stimulate growth, including the Széchenyi Card Programme, the Demján Sándor Programme, the Exim factory building loans and the new Qualified Entrepreneur Loan Programme of the Central Bank of Hungary (MNB). However, according to the bank manager, these have a dual effect. State-supported schemes provide significant assistance, but in the long term it is also worth considering their impact on market equilibrium. If they are available everyone chooses them, but if they disappear financing demand also falls sharply. That is why Tibor Bodor believes that lending must be based on sustainable, market-based principles. The new MNB scheme sounds good on paper, but in practice it is only suitable for few clients. The overall picture is therefore not optimistic, but it isn’t hopeless either: the low-budget flight is still in the air and the turbulence hasn’t passed, but if we stay on course and the support programmes really hit their targets, the landing will be safe.