The latest regular quarterly survey of company managers regarding their assessment of current and future business activity, inflation and exchange rate expectations, and changes in the business climate in the country was conducted in May 2012.

Disclaimer: The results of the survey reflect the opinions of respondents – Ukrainian business managers – as of May 2012, and do not represent the views and policies of the NBU.

Conclusions

According to the survey results, respondents have moderate expectation about growth of the volume of production of goods and services in Ukraine in the next 12 months.

Inflation expectations declined essentially second quarter in a row and approached the all-time minimum. An increase in production costs and energy costs were named as the key factors for the expected high inflation.

Hryvnia to US dollar exchange rate expectation over the next 12 month stabilized on the level of previous quarter.

Respondents improved estimation of their own current financial and economic conditions and have positive estimations. Share of respondents who estimated their own current financial and economic conditions as “good” increased. The respondents reported increase in inventories. This can restrain price growth. Capacity utilization rate increased.

Business expectations index increased to 119.7% (119.3% in the previous quarter). Investment and employment expectations over the next 12 months have improved. Most of respondents have essentially improved business activity expectations over the next 3 months due to seasonal factor.

Most of respondents decreased expectations about input and output prices growth. It means that the price pressure in the economy will be lower over the next 12 months. Production costs and labor costs will also grow slowly. The costs of raw materials and energy are expected to remain the key factor to the changes in output price levels. Influence of the exchange rate volatility and credit interest rates on prices is still on a low level.

The respondents expect growth in borrowing needs over the next quarter. Share of respondents who plan to borrow from banks increased. Most of respondents plan to borrow in hryvnia.

In total, 1,211 enterprises from all regions were interviewed. They were selected to reflect the economy structure with regards to principal types of activity, forms of ownership and size of enterprises as measured by the number of employees.