The domestic SME sector is cautiously waiting

By: Trademagazin Date: 2025. 05. 02. 11:34

In the case of domestic small and medium-sized enterprises, we can speak more of adaptation than of an increase in confidence in the economy, based on the K&H first-quarter SME confidence index, which stands at -13 points on a scale between 100 and -100. According to the newly released, representative research results, the confidence of enterprises shows significant differences by size and sector, for example, the mood of micro-enterprises remains gloomy: the indicator stands at -19 points in their case. However, there is a positive sign that the willingness to invest has not diminished, as 58 percent plan to do so, and digital developments and wage increases are still on the agenda in the sector.

The K&H confidence index, which examines the economic expectations of Hungarian micro, small and medium-sized enterprises, fell to -13 points in the first quarter of 2025 from -11 points at the end of last year. The indicator, which is in the negative range, suggests that businesses are slowly becoming accustomed to adjusting to inflation and prolonged geopolitical uncertainties. This is also supported by the fact that the willingness to invest has increased somewhat, while the confidence index continues to be dragged down by weaker expectations of the smallest companies. The largest decline was observed among companies with annual sales of less than HUF 100 million (-7 points to -19). In the case of medium-sized companies, there was a slight increase (+1 point to -9), while larger companies showed a significant improvement (+10 points to +2).

In terms of sectoral breakdown, expectations for industry (from -8 to -6 points) and agriculture strengthened (from -7 to -3 points), while there was a significant decline in the trade sector (from -9 to -17 points). The reasons for this include inflationary effects, a decrease in purchasing power, a reduction in consumption, as well as the introduction of a margin freeze affecting the sector. Confidence in the service sector also decreased (from -14 to -15 points). Regionally, businesses in the central and western regions of Hungary showed deteriorating prospects with -13 and -7 points, while in the east the indicator essentially stagnated at -19 points. Among the sub-indices, expectations related to the EU improved significantly (+14.5 points), which currently stands at +7 points, while perceptions related to the competitive environment and corporate loan interest rates deteriorated (+2 and -62 points, respectively).

“The results of the latest SME Confidence Index for the first quarter of 2025 show that, although SMEs are trying to adapt, they continue to operate in a challenging economic environment. In this situation, responsible planning plays a key role – especially in the field of efficiency-enhancing investments – which we support with innovative banking and financing services, solutions supporting sustainable operations, as well as advice to encourage financial awareness and business development support,”

emphasized Ildikó Oraveczné Németh, Head of Marketing for the Retail and SME Segment at K&H.