The regular quarterly survey of enterprises' presidents/managers on their assessments of the current and future business activity, inflation and exchange rate expectations, and changes of the business environment in the country was held in August 2007. 1,247 enterprises from all regions, which represented the economy according to principal types of activity, forms of ownership, and size measured by the number of employees, were interviewed.
The main research results of Ukrainian enterprises' business expectations:
The assessment of general economic prospects for the next 12 months somewhat improved, although the negative balance of expectations (calculated as the difference between positive and negative answers) remained and reached -8.5% against -17.9% in the 2nd quarter of 2007.
Inflation expectations increased. The expected average inflation for the next 12 months amounted to 11.7% against 10.9% in the previous quarter.
The influence of the political situation on the rise of consumer prices remained the determinant factor (it was marked by 78.5% of respondents, decreased by 0.2 p.p. compared with the 2nd quarter).
The NBU activity was traditionally not considered by respondents as a factor of inflation pressure (according to 99.4% of respondents), which showed the positive assessment of the National Bank of Ukraine activity in the area of price stability maintenance.
Expectations for the exchange rate stability weakened. Percentage of respondents expecting UAH to USD exchange rate to remain unchanged dropped to 65.7% against 74% in the 2nd quarter. It was the first time since the beginning of the survey conducting when UAH was expected to grow against USD.
Investment activity will retain the high level for the next 12 months; however expectations of investment growth continued to weaken (expectations balance fell to 28.0% against 29.3% in the 2nd quarter).
Further job creation was expected for the next 12 months (the balance was 13.6% against 13.8% in the 2nd quarter).
The respondents' assessment of their current financial and economic state remained one of the highest for the history of this survey (the balance reached 7.3%). For the next 12 months the financial and economic situation was expected to improve: the expectation balance decreased by 0.4 p.p. and came to 28.5%.
The growth of prices for raw materials and energy sources intensified its negative impact on the level of selling prices and enterprises' profitability. Percentage of respondents that stated these as the key factors amounted to 74.7% and 69.0% respectively.
The negative expectations balance of the growth rates of own output realization volumes for the next 12 months reached the lowest level since the beginning of the survey conducting (-19,0%), which showed the strengthening of expectations of further growth slowing down. However, assessment of products realization rates on external markets improved according to respondents of most types of economic activity.
The respondents noted a further improvement in the access to bank loans. The answer balance reached 20.2%.
The respondents continued to name the high level of interest rates (72.5% answers, decline by 3.6 p.p.) and excessive requirements for mortgage value (45.2% answers, decline by 3.2 p.p.) as the main restraining factors for utilization of bank loan services.
On the background of the expected decline in need of loans, percentage of respondents that had an intention to take bank loans dropped by 3.1 p.p. and came to 60%. Among them, the percentage of those who planned to take the next loan in UAH grew by 1.6 p.p. to 76.1%.
More than 80% of respondents admitted that they followed the NBU activity, 10.2% of them – on a regular basis. The analysis of the received information showed a tight connection between the good knowledge of the NBU activity and higher indicators of own development.
The provided data are the reflection of the respondents' views – Ukraine's enterprises as of August 2007, and do not represent the NBU's forecasts and assessments.