Hungarian Sentiment Index Plunges on ‘Deeply Pessimistic’ Mood

Hungary’s May economic sentiment index fell the most since the onset of the global credit crisis in the country in late 2008 as business and consumer moods turned “deeply pessimistic.”

The index dropped to minus 24.9 from minus 19.3 in April, the GKI research institute in Budapest said today in an e-mailed statement. The business confidence index decreased to minus 14 from minus 9, while the consumer confidence index declined to minus 55.9 from minus 48.8.

“The last time such negative opinions about the Hungarian economy were seen was at the end of 2009,” GKI said, adding that businesses and consumers were “deeply pessimistic.”

Hungary’s economy contracted 1.3 percent in the first quarter of the year from the previous three months, jeopardizing the government’s projection for an expansion of 0.1 percent for 2012. The Cabinet has yet to resume financial-aid negotiations with the European Union and the International Monetary Fund collapsed in December.

Forint Weakens

The forint weakened 0.6 percent last week to 300.2 per euro, extending its depreciation in May to 4.5 percent, heading for the biggest slide since September. The benchmark BUX stock index is down 7.9 percent this month.

Sentiment in the manufacturing industry deteriorated “dramatically” in May and fell “significantly” in the commercial sector, according to GKI. Households’ perception of their financial situation and their ability to save was at the lowest level since 1993 when GKI started gaging consumer sentiment, the institute said in the statement.

Prime Minister Viktor Orban will introduce new taxes on phone calls, financial transactions and insurance products to trim the budget deficit below the EU’s 3 percent of economic output limit and end an excessive-deficit procedure.

GKI’s indexes are calculated based on a balance of positive and negative answers to questions about the outlook for the economy.