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 2011.
Conclusions
According to the survey results, respondents worsened their estimations of the increase in the volume of production of goods and services in Ukraine in the next 12 months. Balance of answers (calculated as the difference between the percentage of positive and negative responses) decreased by 6.9 p.p. to 9.2%. But respondents continued to expect economic growth.
Inflation expectations, in contrast to the previous quarter, have slightly declined. The weighted average expected inflation rate decreased to 14.5% vs. 14.7% in Q1 of 2011. An increase in production costs and energy cost was named as the key factor for the high expected inflation. The influences of the NBU activity and exchange rate fluctuations on inflation have occupied last places on the inflation factors’ rating.
Share of respondents who expect the UAH to USD exchange rate to remain unchanged slightly decreased.
Estimation of the current business activity improved. According to the survey results, the respondents persisted with their negative assessment of their own current financial and economic conditions. But the balance of opinions has improved (-2.9% vs. -6.7% in Q1). The respondents reported decrease in inventories. Capacity utilization has increased.
Business expectations index declined to 120.2% vs. 123.2% in Q1. According to the respondents’ expectations, all components of the index became slightly worse, but still remained on positive level. Expectations about financial and economic conditions, future sales, investments, employment over the next 12 month decreased. Most of respondents significantly improved positive business activity expectations over the next 3 months.
Most of respondents expect input and output prices growth. Production costs and labor costs will grow. The cost of raw materials and energy are expected to remain the key factors 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 noted a weakening of credit conditions and expect reduction in borrowing needs over the next 3 months. The high level of interest rates remains the key restraining factor in borrowing from banks. Influence of the exchange rate volatility factor is low.
In total, 1199 enterprises from all regions were interviewed. They were selected to reflect the economy structure with regard to principal types of activity, forms of ownership and size of enterprises as measured by the number of employees.
Disclaimer: The results of the survey reflect the opinions of respondents – Ukrainian business managers – as of May 2011, and do not represent the views and policies of the NBU.