According to the latest data from the K&H SME Confidence Index, which measures the economic sentiment of Hungarian small and medium-sized enterprises, the sector continues to look to the future with negative expectations. According to the results of the research for the second quarter of 2025, the index stands at -14 points on a scale from -100 to 100, which is only a one-point decrease compared to the previous quarter, but in a one-year period it is already the third period of continuous decline.

Long-term negative trend

The current level of the confidence index is particularly worrying, considering that it has been at similar depths – with minor fluctuations – since the fall of 2023. The last time the indicator was at a similar level was during the outbreak of the Russian-Ukrainian conflict, which clearly shows the severity of the current economic situation from the perspective of businesses.

According to Ildikó Oraveczné Németh, Marketing Manager of the K&H Retail and SME segment, the recent results unfortunately show a worsening trend in terms of business expectations, as they do not expect increasing sales in the current economic situation. Supporting the SME sector with innovative banking and financing services is particularly important for K&H in this challenging period.

Sectoral differences

The sectoral breakdown shows an even more nuanced picture of the mood of the SME sector. In the case of industrial companies, they returned to the level measured a year ago with -8 points, from -6 points in the first quarter. The situation in the service sector is even worse: the indicator is at -17 points, which has not been the case since 2013. This is particularly worrying, as the service sector accounts for a significant part of the Hungarian economy.

Only the trade sector indicator increased from -17 points, but with the current -13 points it is still in strongly negative territory. This indicates that economic pessimism affects almost all sectors, albeit to different degrees.

Revenue and profit expectations

Over the past year, the annual revenue growth expectations of SMEs have stabilized at 7 percent, but in the last measurement cycle this has decreased, and company managers are now only expecting a 6 percent increase. It is important to highlight that despite the slowdown, SMEs continue to expect growth, which is a positive sign despite the pessimistic mood.

There has been no change in terms of profits – over the past year, business managers have planned an average profit of 4 percent, and the average profit rate has been stable around 4 percent over a three-year period.

Differences by company size

When examining the development of revenue by company size, interesting differences emerge. Only the largest companies, with sales between 300 million and 2 billion forints, show a significant change: their revenue expectations show a 3 percentage point decrease, which now stands at 4 percent.

The research measured values around 6 percent, with a one percentage point decrease for companies in the middle, 100-300 million forints revenue category. In contrast, the expectations of the smallest increased by one percentage point, reaching 7 percent.

Reasons for pessimism

According to experts, the smallest companies are more affected by the economic stimulus programs introduced by the government, while the largest SMEs are already more heavily involved in exports and the current uncertain international economic situation is urging them to be cautious. This also contributes to their more pessimistic mood.

Although the profit forecast is stagnant at around 4 percent for the entire sample, it shows a more nuanced picture when viewed by company size. The average expectations of the smallest companies improved by more than one and a half percentage points, reaching 4 percent, while those of medium-sized companies decreased by 1 percentage point and those of the largest by 2 percentage points.

Consequences and prospects

The continuous deterioration of the SME confidence index poses a serious challenge for the Hungarian economy, as small and medium-sized enterprises form the backbone of the economy. Pessimistic expectations can affect investment decisions, job creation and economic growth.

It is an important task for both the banking sector and the government to take measures that can restore business confidence and stimulate economic activity. The innovative financing solutions mentioned by K&H and the services that promote sustainable operations can play a key role in this.

Source: K&H Bank SME Confidence Index Research, HírExtra