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 August 2011.
Conclusions
According to the survey results, respondents expect economic growth in Ukraine in the next 12 months. Expectations about the volume of production of goods and services improved. Balance of answers (calculated as the difference between the percentage of positive and negative responses) increased by 1.7 p.p. to 10.9%.
Inflation expectations have declined second quarter in a row. The weighted average expected inflation rate decreased to 13.6% vs. 14.5% in Q2 of 2011. An increase in production costs and energy costs were named as the key factors for the expected high inflation. The influences of the NBU activity and exchange rate fluctuations on inflation have occupied the bottom places on the rating of inflation factors.
Share of respondents who expect the UAH to USD exchange rate to remain unchanged decreased.
Estimation of the current business activity considerably improved. According to the survey results, the respondents estimated their own current financial and economic conditions as positive first time from the end of 2008. The balance of opinions has improved (4.3% vs. -2.9% in Q2). The respondents reported increase in inventories. Capacity utilization has increased.
Business expectations index declined to 119.1% vs. 120.2% in Q2. Expectations about investments in buildings and about employment growth over the next 12 months improved. Expectations about financial and economic conditions, future sales, investments in machinery, and employment over the next 12 months became slightly worse. Most of respondents have 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 reduction in loans availability 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, 1,250 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.
Disclaimer: The results of the survey reflect the opinions of respondents – Ukrainian business managers – as of August 2011, and do not represent the views and policies of the NBU.