A recent study indicates a notable increase in investment intentions among businesses in Hungary, with 57.1% of companies planning to invest this year, up from 27.2% in the previous year.

This data was presented by László Márton, the national economy minister of Hungary, highlighting a growing confidence across several industries.

The sectors expressing the strongest intentions for expansion include agriculture, health care, and telecommunications.

Conversely, businesses in the manufacturing and logistics sectors exhibit a slightly more cautious outlook, although Márton believes their perspectives may shift positively following a vote today in the German Bundestag on a new investment stimulus package that could bolster the local economy.

In tourism and construction, recent monthly data reflects significant development, with anticipated changes also expected in the pharmaceutical and food industries in the near future.

Micro-enterprises are expected to lead the investment activity, with 59.6% of them considering new investments, followed closely by small enterprises at 58.9%.

Demand for products is anticipated to rise, with 42% of companies forecasting increased demand and only 13.5% expecting a decline.

This year's investments are reportedly less hindered by labor shortages and negative economic forecasts, although firms remain cautious primarily due to concerns over inflation.

Following inflation, worries about demand and administrative burdens were identified as significant challenges.

The volatility of the euro exchange rate has also created unease among businesses, although Márton described the recent strengthening of the forint as a positive development.

However, companies have expressed a greater interest in a stable and predictable currency exchange rate.

A significant underutilization of capacity exists within the corporate sector, particularly in large enterprises, while smaller enterprises show fewer excess capacities, suggesting a potentially quicker emergence of investment demand in the latter.

It is essential to note that most planned developments focus on enhancing efficiency and productivity rather than new investments.

In terms of employment, 17.6% of companies plan to hire new staff, while only 6.3% anticipate layoffs, with 75% aiming to maintain their current workforce.

According to the survey, 42.7% of companies face no difficulties in fulfilling their three-year wage agreements, and 25.4% report minimal challenges.

However, sectors with significant employment of minimum wage workers, such as hospitality and construction, may encounter more serious issues related to minimum wage increases.

The government has introduced measures to alleviate these concerns, including offering reduced contributions for minimum wage employees.

Regarding funding for investments, 68% of companies still plan to finance their developments internally, down from 78% two years prior.

The remaining 22% seek a combination of grants and both subsidized and market loans to fund their investments.

The credit market remains a concern, with last year’s modest expansion in corporate loan volume attributed mainly to an increase in foreign currency loans for small businesses, while forint loans decreased by 4.6% in 2024.

The subdued demand for credit is partially linked to cautious demand levels, although the market interest rates for small business loans, around 8%, pose additional constraints.

An increase in demand for loans following the reduction of rates on Széchenyi investment loans indicates that pricing may play a critical role in influencing credit demand.

Márton dismissed questions regarding the potential for a new low-interest central bank loan program similar to the Growth Loan Program, stating that such matters should be addressed by the central bank itself.

Interest remains strong in the elements of the Demján Sándor Program, which evaluations suggest could effectively stimulate corporate investments.

The non-refundable support component of the 1+1 Investment Development Program has ended, with 28.2% of the 1,885 submissions aimed at investment in the most disadvantaged areas, indicating that projects in these regions may stand a good chance of receiving support based on development principles.