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HCCI Research Institute of Economics and Enterprise. The Business Situation the Hungarian Enterprises and Their Responses to the Economic Crisis. Ágnes Makó – Ágnes Czibik – István János Tóth. Workshop on Sentiment Indicators and the Current Crisis Budapest, Lánchíd 19 Design Hotel
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HCCI Research Institute of Economics and Enterprise The Business Situation the Hungarian Enterprises andTheir Responses to the Economic Crisis Ágnes Makó – Ágnes Czibik – István János Tóth Workshop on Sentiment Indicators andthe Current Crisis Budapest, Lánchíd 19 Design Hotel Monday 9 November 2009 9:00 http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions Topics • Crisis in Hungary – a brief review • Crisis in Hungary – results of GVI business tendency survey • Steps of adaptation – results of two ad-hoc surveys • Conclusions http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions Macroeconomic data – a brief review http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions GDP growth rate: recession before the crisis • Long recessionperiod before the crisis: 2006.q3 -2007.q4 • World crisis: 2008.q2 – • Dramatic deterioration http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions GDP growth rate: the German and Hungarian recession link up http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions Dramatic rise of unemployment from 2008.q4 http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions Rise in Unemployment: in developed regions • More developed regions, higher growth rate of unemployment • Period of significant rise: from October 2008 to March 2009 higher growth rate lower growth rate http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions The end of the crisis: When? http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions The end of the crisis: When? http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions The end of the crisis: When? http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions The end of the crisis: When? http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions The end of the crisis: When? http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions The end of the crisis: When? http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions Crisis in Hungary – results of GVI business tendency survey http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions Definition of GVI BCI GVI BCI = 0,1*UHJ (present business situation) + 0,2*UHV (expected business situation in next 6 months ) + 0,1*VJJ (present financial situation) + 0,2*VJV (expected financial situation in next 6 months) + 0,2*MSV (level of total order books) 0,1*BGV (investments to machines, equipments in next 6 months) 0,1*BEV (investment to real estates in next 6 months) http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions Survey parameters • Period: 1998- • Survey method: mail survey and CATI • Sample: Hungarian enterprises • Case numbers: 1300-1900 companies • Regularity: twice a year (April and October) • Weighting: by company size (by contribution to the GDP) and regional • Test of homogeneity: identical sample distribution by company size and region • Good predictor for GDP growth rate change • Lead time: cca. 90 days http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions The performance of theGVI Business Tendency Survey- an illustrative analysis http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions 1st step: Scatterplot of GDP growth rate and GVI BCI (t=24) • R = 0,891p > 0,000t = 24 • Due to the unit root (cointegration) problem, we have to detrend the time series • Simple method: differencesdT = Ti+1 - Ti http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions 2nd step: GDP growth rate and GVI BCI (detrended by difference, t=23) • R = 0,583p > 0,003 http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions Scatterplot of GDP growth rate and GVI BCI (detrended data, t=23) • R2 = 0,34p > 0,000t = 23 • Strong positive relationship • The GVI BCI’s changeis good predictor of the change of GDP growth rate http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions Toward the turning point? http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions turning point in the crisis in Hungary ? http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions http://www.gvi.hu/
Topics Macro data GVI survey Steps of adaptation Conclusions Steps of adaptation – results of two ad-hoc surveys http://www.gvi.hu/
Survey parameters Period: March and June 2009 Survey method: CATI Sample: Hungarian enterprises, quota sampling by bank loans Case numbers: 314 companies in March, 302 companies in June. Panel database: N=258 Test of homogeneity: identical sample distribution by company size and sectors Topics Macro data GVI survey Steps of adaptation Conclusions http://www.gvi.hu/ 32
Topics Macro data GVI survey Steps of adaptation Conclusions Results http://www.gvi.hu/
Drop in domestic sales Topics Macro data GVI survey Steps of adaptation Conclusions 2014.11.05. 19:36 • Decrease of sales in construction and in the processing industry • Governmental spending-cut measures, fall of governmental investments http://www.gvi.hu/ 34
Improving expectations of large companies Topics Macro data GVI survey Steps of adaptation Conclusions • Progressing expectations of the largest companies • Dual economy in Hungary: efficiency – large company size, foreign ownership, production for export markets 2014.11.05. 19:36 http://www.gvi.hu/ 35
Improving business climate in Germany Topics Macro data GVI survey Steps of adaptation Conclusions • Ifo: improving business climate for 4 months • Expanding export opportunities • Hungarian export headed to Germany: 28.4% (2007); 26.6% (2008) 2014.11.05. 19:36 http://www.gvi.hu/ 36
Panel data – classification of change Topics Macro data GVI survey Steps of adaptation Conclusions 2014.11.05. 19:36 http://www.gvi.hu/ 37
Topics Macro data GVI survey Steps of adaptation Conclusions Companies with loans vs. without loans http://www.gvi.hu/
Progressing expectations of companies with loans Topics Macro data GVI survey Steps of adaptation Conclusions • Raising loans –improving expectations • Restoration of the loan market situation – recovery of the real economy 2014.11.05. 19:36 http://www.gvi.hu/ 39
Topics Macro data GVI survey Steps of adaptation Conclusions Applied crisis management measures 2014.11.05. 19:36 http://www.gvi.hu/ 40
Applied crisis management measures I. Topics Macro data GVI survey Steps of adaptation Conclusions • Rapid reaction to the crisis • Several different measures • Shorter working hours at 19% • Workforce cut at 42% of the companies 2014.11.05. 19:36 http://www.gvi.hu/ 41
Applied crisis management measures II. Topics Macro data GVI survey Steps of adaptation Conclusions • Reducing costs is prevailing • Searching for new markets: 82% • Postpone the shrinking of the company 2014.11.05. 19:36 http://www.gvi.hu/ 42
Searching for new markets Topics Macro data GVI survey Steps of adaptation Conclusions • Active and "expansionist" reaction at companies with export sales • Appearance of the dual economy 2014.11.05. 19:36 http://www.gvi.hu/ 43
Part-time working hours by exports Topics Macro data GVI survey Steps of adaptation Conclusions • Part-time working hours at companies with export sales • Non-typical form of employment in Hungary http://www.gvi.hu/ 44
Part-time working hours by company size Topics Macro data GVI survey Steps of adaptation Conclusions • Diminishing labor force demand • Rising unemployment 2014.11.05. 19:36 http://www.gvi.hu/ 45
Dismissal and part-time work Topics Macro data GVI survey Steps of adaptation Conclusions • Workforce cut and part-time work – complementary crisis management measures • Enterprises in unfavorable business situation apply several methods 2014.11.05. 19:36 http://www.gvi.hu/ 46
New long-term plans by foreign ownership Topics Macro data GVI survey Steps of adaptation Conclusions • Long-term planning at companies with foreign ownership • A different business mentality? 2014.11.05. 19:36 http://www.gvi.hu/ 47
Conclusions Rapid reaction with diverse measures Unfavorable situation – parallel application of several measures More efficient companies are more efficient in self-protection Recovery of loan markets supports real economy Slight improvement in expectations - toward the turning point? The end of the crisis is cannot be seen yet Topics Macro data GVI survey Steps of adaptation Conclusions 2014.11.05. 19:36 http://www.gvi.hu/ 48
Topics Macro data GVI survey Steps of adaptation Conclusions Thank you for your attention!You can download this presentation from the GVI website from November 12 2009http://www.gvi.hu/ http://www.gvi.hu/