Opten: The number of companies may drop below half a million

According to OPTEN data, the number of partnerships has been decreasing for two years, decreasing by nearly 23 thousand by October this year. Although the current number of companies still exceeds half a million, this is already below the value of over 600 thousand that was common in the early 2010s, but this does not indicate mass failures. The trend in the corporate sector has been characterized by decreasing company numbers since 2013, with the only exceptions being 2021 and 2022.

Interestingly, the number of partnerships is only 10,000 below the level of 2019, the last year before the pandemic. Over the past five years, companies have faced challenges such as the pandemic, the war in a neighboring country, and global economic changes. “I consider the past and current period to be a period of adaptation, which is not over yet. Such an adaptation is a serious challenge for every entrepreneur, and I believe that the 10,000 fewer businesses is more a testament to perseverance and resilience. However, the process of adaptation is not over yet,” said Csaba Alföldi, a company information expert at OPTEN.

According to OPTEN data, the number of new businesses in 2024, up to and including October, will continue to lag behind the same period of the previous year, barely exceeding 20,000, which is almost a thousand less than last year. However, a positive change is that the number of closures has decreased in this comparison – nearly 2,500 fewer businesses have closed this year – although the number of closures is still close to 30,000. Among the newly initiated procedures, the number of forced cancellation and unprecedented liquidation procedures increased compared to the previous year, by about 1,800, which indicates the continuation of negative processes. At the same time, the decrease in the number of those initiating final liquidation may indicate a somewhat positive trend; this year, more than 10% fewer people decided to “voluntarily” close their businesses, although their number still exceeds 10,000.

According to the KSH’s Q3 GDP report, the volume of gross domestic product decreased compared to the same period of the previous year, to which the combined performance of agriculture, industry and construction, which account for nearly one-third of the national economy, contributed about 2 percentage points. It is worth adding trade to these three sectors and examining their company trends in 2023.

This year, the number of enterprises has decreased in all sectors of the national economy, except for the electricity sector and the financial and insurance sector. The overall decline compared to December last year is below 2%, but the average in the affected sectors is 2.3%, except for agriculture, where the decrease remained below 1%. More than half of the decrease in the number of enterprises occurred in these four sectors. The incentive to establish new companies remains low, with the number of new companies typically reaching 65-75% of the number of closed companies, while in the manufacturing industry it barely reaches half of the number of closed companies. A reversal of the trend is not expected in the short term, and the number of new procedures remains high in these sectors.

“No significant turnaround in the company trend is expected this year, but the focus of attention is on the 21-point New Economic Policy Action Plan. Although the details are not yet final, the government expects significant GDP growth for next year and beyond with the help of the Action Plan. And the growth of GDP will certainly have a positive effect on company trends.”

– said Csaba Alföldi, company information expert.

The Opten – Company Fluctuation Index (CFI – compares the number of companies cancelled and founded during the given period to those operating properly at the beginning of the period) in October averaged around 9-10 percent. At the county level, the highest fluctuation during the examined period was produced by Budapest, Szabolcs-Szatmár-Bereg and Jász-Nagykun-Szolnok counties, while the Opten–CFI reached the lowest values ​​in Csongrád-Csanád, Bács-Kiskun and Veszprém counties.