Will Small Businesses Save Hungary’s Stagnant Economy?
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The overall performance of the Hungarian economy has been declining for several quarters. The government has tried various methods, but so far has been unable to significantly increase consumption and investments, and the volume of industrial production has also continued to decline.
The latest plan is to support small and medium-sized enterprises (SMEs) to improve economic performance. Primarily, the digitalization of businesses would be the aid that would increase corporate performance.A table on the website of the Central Statistical Office (KSH) presents the performance indicators of enterprises by SME category. The table includes the number of enterprises, the number of employees, net sales revenue, value added, and export sales.
The table’s data spans from 2013 to 2022.The number of enterprises was 614,834 in 2013 and 976,964 in 2022. The number of employees was 2,661,841 in 2013 and 3,364,251 in 2022. Net sales revenue was HUF 78,784,420 million in 2013 and HUF 186,114,134 million in 2022. Value added was HUF 15,261,951 million in 2013 and HUF 37,790,333 million in 2022. Export sales were HUF 26,132,793 million in 2013 and HUF 65,483,573 million in 2022.The proportion of SMEs among all enterprises was 98.4% in 2013 and 99.2% in 2022. In 2022, the 888,000 enterprises employing 1-9 people employed a total of 1,351,000 people.
Micro-enterprises make up the vast majority of businesses in Hungary. They are often sole proprietorships or family businesses. They can adapt quickly to market changes and primarily serve the local market. Compared to large companies, they typically generate lower net sales revenue and added value. They have more difficulty accessing credit and other sources of financing. The probability of bankruptcy and closure is higher. Many new ideas and innovations come from micro-enterprises. They play a significant role in job creation, especially in local communities.Most micro-enterprises operate in the service sector (e.g., trade, hospitality, professional services). They are also present in significant numbers in industry and construction.They play a smaller but important role in agriculture, especially in rural areas. Due to their local operating area, micro-enterprises do not require extensive digitalization solutions beyond those that are available on a market basis and those that are accessible on increasingly high-quality smartphones.Due to their structure, micro-enterprises do not strive for constant development and continuous increase in their net sales revenue.
ccording to KSH, between 2013 and 2022, their total net sales revenue increased from HUF 10 billion to HUF 19 billion, but most of the increase is due to inflationary pressure. All signs indicate that in the case of the examined enterprises, loans granted for the development of tangible assets can increase the added value of the enterprises, but they typically do not need digital development.