Expectations reaching lowest point ever

According to a survey conducted by GKI Gazdaságkutató Zrt., both business and consumer expectations continued to drop in December, but the rate of decline slowed down. Retailers did not expect their stocks to continue expanding, but were substantially more pessimistic regarding future sales and market positions. Only a moderate rise in prices is expected by retailers. Future sales and employment were also viewed with noticeably more pessimism than before in the services sector. Economic prospects were generally seen more pessimistically by all sectors and also by consumers. Significant improvements in the macroeconomic environment are expected by only a few percent of the people interviewed. Companies are hit primarily by a drop in demand and respond by economising. Three-quarters of industrial enterprises expect their market opportunities to decrease and only 2 percent believe that the crisis will bring new opportunities for them. 50 percent of retailers worry about a drop in demand and many also expect the cost of financing to rise. The consumer confidence index of GKI had showed slow improvement in the May-September 2008 period and has been dropping since October. People are most pessimistic about employment, but show less pessimism about their own financial position. Expectations regarding inflation did not show significant change in December.