I just flew back the US on Sunday (9/18/2022) after a week in Budapest, Hungary. I was very interested to hear what top economic topics are being discussed and see how things are functioning in Europe with all the energy and inflation challenges these days.
One factor you did not mention is the deep dive of the currency (HUF) compared to EUR or USD. This 30% loss in the value of the currency in less then a year causes some significant issues and there are some interesting results. Given the Hungarian economy is relying on import, this has a big impact on everything and boosts the inflation significantly.
One interesting aspect on corporate strategy: some multinational companies, who were struggling on the competitive labor market specially when searching for talent (like software engineers) now started to offer salaries 30% higher in HUF to be more attractive, given it does not even change their bottom line, the cost will be the same in USD. Others, with the slowing global economy happily acknowledged the fact that labor got cheaper then budgeted and improves their bottom line. Will be interesting to see how these two strategies will play out in the short and medium term.
Excellent points Attila. Yeah, I hint at the HUF change, but didn't dive into it. Interesting about the salaries too.
One other thing I didn't mention in this column is also that there is a lot of government interest in Hungary to see how the Hungarians SME's can develop around the multinationals. So I think everyone sees the situation and challenge.
In any case... thanks for reading. Comment anytime. I love feedback! And let's all hope things aren't going to get too bad. In the end, I'm an optimist :-)
Great summary!
One factor you did not mention is the deep dive of the currency (HUF) compared to EUR or USD. This 30% loss in the value of the currency in less then a year causes some significant issues and there are some interesting results. Given the Hungarian economy is relying on import, this has a big impact on everything and boosts the inflation significantly.
One interesting aspect on corporate strategy: some multinational companies, who were struggling on the competitive labor market specially when searching for talent (like software engineers) now started to offer salaries 30% higher in HUF to be more attractive, given it does not even change their bottom line, the cost will be the same in USD. Others, with the slowing global economy happily acknowledged the fact that labor got cheaper then budgeted and improves their bottom line. Will be interesting to see how these two strategies will play out in the short and medium term.
Excellent points Attila. Yeah, I hint at the HUF change, but didn't dive into it. Interesting about the salaries too.
One other thing I didn't mention in this column is also that there is a lot of government interest in Hungary to see how the Hungarians SME's can develop around the multinationals. So I think everyone sees the situation and challenge.
In any case... thanks for reading. Comment anytime. I love feedback! And let's all hope things aren't going to get too bad. In the end, I'm an optimist :-)