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 February 2007. 1,214 enterprises from all regions were interviewed, which represented the economy according to principal types of activity, forms of ownership, and size measured by the number of employees.
The main research results of Ukrainian enterprises' business expectations:
The assessment of general economic prospects for the next 12 months continued to get worse. The negative balance of expectations (calculated as the difference between positive and negative answers) increased and reached -11.2% against -4.3% in the 4th quarter of 2006.
Inflation expectations decreased for the third quarter consecutively. The expected average inflation for the next 12 months amounted to 11.1% against 11.6% in the previous quarter.
The most influential inflation factors were traditionally considered to be economical and political situation in the country, 77.2% and 68.5% of respondents respectively. Moreover, the negative impact of the political situation on inflation intensified considerably.
The exchange rate and the NBU activity were not considered by respondents as factors of inflation pressure. Percentage of respondents that mentioned these factors amounted to only 4.8% and 1.2%. These data show the positive assessment of the National Bank of Ukraine activity in the area of price stability maintenance.
Expectations for the exchange rate stability improved. Percentage of respondents expecting UAH to USD exchange rate to remain unchanged increased from 64.9% to 73.6%.
The level of finished commodity remainders dropped considerably which showed the growth of surplus demand in the economy.
The next 12 months are expected to show the growth of products realization volumes, although at slower rates. The respondents' expectations balance of preservation of growth rates of their own products realization increased by 3.5 p.p. to -14.7%.
Investment activity will retain the high level (expectations balance came to 31.9% against 33.1% in the 4th quarter).
Expectations balance of employment grew by 3.6 p.p. to 15.2%, which showed the possibility of speeding up the process of creating new work places.
The respondents' assessment of their current financial and economic state also continued to improve. The balance rose by 0.5 p.p. and reached 2.9%. In the next 12 months the financial and economic situation is expected to improve: the expectation balance grew by 3.3 p.p. and reached 28.0%.
The growth of prices for energy sources and raw materials remained the main restraining factors of enterprises' income growth. Percentage of respondents that stated these factors amounted to 74% and 67% respectively. The same factors stimulated growth of selling prices.
The respondents noted a further improvement in the access to bank loans. The answer balance grew to 15.5% against 14.8% in the 4th quarter of 2006.
The respondents continued to name the high level of interest rates (78.3% answers, decline by 2.6 p.p.) and excessive requirements for mortgage value (43.0% answers, increase by 3.7 p.p.) as the main restraining factors for bank loans disbursement.
Percentage of respondents that had an intention to take bank loans grew by 7.9 p.p. and reached 61.2%.
More than 84.4% of respondents admitted that they followed the NBU activity, 10% – 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 February 2007, and do not represent the NBU's forecasts and assessments.