12 July 2017

Press Release


The results of the Business Outlook Survey (BOS)  conducted by the National Bank of Ukraine in Q2 2017 suggest that Ukrainian businesses continue to expect a pick-up in business activity.


Respondents' optimistic expectations are based on the improved forecasts regarding investment  growth, an improvement in the financial and economic standing of their enterprises, as well as high assessments of total sales growth.


The polled respondents continue to expect the macroeconomic situation in Ukraine to improve.  Their optimistic forecasts are based on expectations of faster output growth, a pick-up in business activity, a slowdown in inflation and  weakened depreciation developments.


With a stable FX market in Q2 2017, inflation and depreciation expectations of businesses eased. Respondents expect consumer prices to increase by 9.9% over the next 12 months. This being said, four out of ten respondents project inflation to remain below 9.0% or trend downwards. The number of respondents expecting the UAH/USD exchange rate to remain unchanged or strengthen (from 13.5% in Q1 to 24.6% in Q2  2017) has almost doubled.


For the first time since Q1 2014 an impact of exchange rate factor was not perceived as the key factor driving consumer price inflation. Instead, respondents referred to production costs as the main factor driving consumer price growth (70.5% of responses versus 70.9% responses in Q1 2017).

The Business Outlook Index stood at 114.3%, up from 113.3% in the previous quarter. The most optimistic were agricultural enterprises (120.6%),  trade  (118.8%) and manufacturing enterprises (118.3%).


Respondents  expect a rise in the output of Ukrainian goods and services over the next 12 months - the balance of expectations was 14.2% versus 6.1% in Q4. The manufacturing, energy, and water supply enterprises are the most optimistic.


As in the previous quarter, respondents referred to excessively high prices for energy, commodities and supplies as the main constraints on production growth.


Respondents have remained optimistic about the financial and economic standing of their enterprises, with the balance of responses having increased  to 6.1%, up from 2.3% in the previous quarter.


Respondents have been strongly expecting total sales growth for five quarters running (with a balance of expectations of 25.2% versus 27.7% in Q1 2017). The most optimistic were agricultural and trade enterprises. At this, respondents of most economic activities expect a rise in sales of goods (services) in the external market.


Respondents continue to report the highest assessments of a rise in investment in  machinery, equipment and instruments, with a balance of responses of 18.7%, up from 15.5% in Q1. The most optimistic were transport and communication enterprises.


In Q2, enterprises significantly increased their expectations of a rise in foreign investment: the balance of responses was 10.3% versus 6.0% Q1 2017.


Respondents have continued to expect staff increases for the second consecutive quarter: the balance of responses was 2.3%, up from 1.8% in Q1 2017. Staff rises are projected by construction, manufacturing and trade enterprises.


Respondents increased their expectations of a rise in borrowing needs in the short-term: the balance of responses was 38.5%, up from 36.7% in Q1 2017. The highest borrowing needs were reported by construction enterprises. In terms of funding sources, 38.2% of enterprises intend to take out loans (versus 34.0% in Q1 2017). Of which 85.6% of respondents intend to take out hryvnia loans. Traditionally, agricultural, trade, transport, communication and construction enterprises  most likely to take out hryvnia loans.


For reference

The Business Outlook Survey was conducted from 11 May through 9 June 2017. 667 enterprises from 22 regions of Ukraine (excluding temporarily occupied Crimea and Donetsk and Luhansk regions), representing the economy in terms of main economic activities, patterns of ownership, size and staff number, were polled in the survey. The survey only reflects the opinions of respondents (heads/managers of Ukrainian enterprises) who were polled, and does not represent NBU estimates.