Improving expectations

The business expectation index of GKI showed some improvement in February. While entrepreneurial expectations show a definite improvement, consumer expectations show stagnation. All sectors of the economy show more optimism than before. The value of the confidence index in the retail sector grew by a significant degree in February, but still remains very low. The confidence index in the services sector also shows a major improvement, but this sector had been optimistic in the past as well. The number of businesses planning price rises in the industrial sector dropped compared to January, but the drop was smaller than usual. In February, price cuts were planned in the meat, fish, poultry processing industries. However, price rises were also foreseen in the retail sector. Optimism regarding the prospects of the Hungarian economy for the next three months declined in the construction and industrial sectors, while improved in the retail and services sectors. Consumer expectations remained unchanged. Following the major drop in the middle of 2006, the consumer confidence index of GKI had shown slow improvement till the middle of 2007, then returned to the previous level. Consumer expectations regarding their financial position are much better than they were a year ago. Inflation is also expected to be kept under control.