If you could define the global economy in 2022 with just one word, it would likely be “inflation.” Whether as a result of the pandemic, supply chain disruptions, or corporate price gouging, global inflation rates have been on the rise since at least mid-2021 and haven’t slowed yet. Hungary is no exception to this trend: the country faced higher inflation and energy prices last year, with inflation rates increasing 14.8% year-over-year. Additionally, the European Commission predicts that inflation will see even further growth in 2023, anticipating a 15.7% increase year-over-year. All of this suggests that Hungary will soon be joining the rest of Europe in a recession.
Yet despite the obvious setbacks this causes, a recession can serve as a wake-up call for businesses to make meaningful changes that better position them to handle economic volatility. Over the past few years, the world has seen a series of events that each would’ve been considered “once-in-a-generation” moments under normal circumstances. In just the last decade we’ve had Brexit, the COVID-19 pandemic, a global financial crisis, and the war in Ukraine. This environment of constant disruption is likely to carry over into 2023 and beyond, so businesses need to be prepared to handle this kind of economic volatility.
With a period of worrying economic downturn on the horizon, businesses owe it to themselves to break down their costs, processes, products, and services at a granular level. From there, company leaders can take the steps needed to make their company leaner and more resilient, focusing on what their business does well and finding ways they can do it even better. Of course, while cutting costs is important, it shouldn’t be done without careful consideration. Some businesses are quick to start making cuts to save money, but end up sacrificing elements that generate long-term growth. The recession is a catalyst for change, but you should change only when it tangibly improves your company.
It can be difficult to know how to approach this type of expense reduction process, but thankfully there are specialists that can provide much-needed support. For example, the Expense Reduction Analysts’ insurance team works with clients to fully understand their business, serving as an extension of their management team to assist with understanding risk and providing specialist insurance procurement services. ERA provides strategic advice and practical methods which optimize supplier relationships, streamlining for affordability without sacrificing vital growth elements. By leveraging insights and an advanced insurance industry network, ERA maximizes the value that clients derive from their supply chain, while also minimizing the long-term cost of risk.
While this type of strategic approach takes time and effort, it’s clear that inflation isn’t going away anytime soon, so companies cannot afford to wait to take action. Companies cannot afford to “wait out” inflation rates and stick to “business as usual.” With the support of ERA specialists though, companies can prepare to defend themselves against current disruptions. Our Hungarian team is working closely with businesses in the region, helping them build smarter strategies to ensure they are ready for the next major economic shakeup. So if you want to cut costs and get the most value from your supply chains, contact the experts at ERA!
