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Businesses Continue to Report Positive Economic Outlook – Q3 2023 Business Outlook Survey

Businesses Continue to Report Positive Economic Outlook – Q3 2023 Business Outlook Survey

Despite the ongoing full-scale war, businesses, for two quarters in a row, have been expecting a rebound in business activity over the next 12 months. On the back of a stable energy system, respondents continued to expect an increase in the output of goods and services, while also reporting a positive outlook for the performance of their companies. Inflation and exchange rate expectations also improved.

The business outlook index (BOI) was 104.5%, unchanged on Q2 2023 (Q2).The optimistic outlook resulted, among other things, from stronger positive expectations for investment in machinery, equipment and tools and for total sales, as well as from softer negative expectations for construction spending. At the same time, respondents reported firmer intentions to cut their workforces.

Businesses’ macroeconomic expectations for Ukraine

For two quarters running, businesses have expected an increase in the output of Ukrainian goods and services over the next 12 months, the balance of responses being 9.8%, compared to 17.3% in Q2. Growth was expected by companies across most types of economic activity, business lines, sizes in terms of staff numbers, as well as across most oblasts.

Inflation expectations continued to improve – in Q3 2023 the expected annual inflation rate was 14.8%, compared to 15.7% in the previous quarter. The proportion of respondents who expected inflation to be below 15% was 52.2%, up from 46.6% in the previous survey. A total of 83.7% of respondents continued to believe ongoing hostilities to be the most important inflation driver. The impact of the exchange rate was expected to increase slightly, by 1.6 pp, to 56.3%. For three quarters in a row, respondents have said they expected the impact of tax changes to increase most of all, by 5.9 pp, to 21.8%.

Respondents continued to soften their depreciation expectations – the average UAH/USD exchange rate was projected to hit UAH 40.00 per USD 1 in 12 months (UAH 40.43 per USD 1 in the previous quarter). Over half of the respondents (56.5% compared to 44.3% in Q2) expected that the UAH/USD exchange rate would not exceed UAH 40.00 per USD 1 over the next 12 months.

Companies’ current standings and their business outlook

Despite there being positive trends, companies’ current financial and economic standings remained weak, while their overall assessment continued to be negative, the balance of responses being (-5.8%), up from (-11.1%) in Q2.

At the same time, respondents remained upbeat about the outlook for the financial and economic standings of their companies over the next 12 months, the balance of responses being 6.0%, down from 9.6% in Q2 2023. An improvement in financial and economic standings was expected across most economic sectors, with companies in the construction and manufacturing sectors being the most optimistic (balances of responses of 15.0% and 13.2% respectively).

Businesses continued to expect an increase in total sales, including in external sales, the balances of responses being 16.8% and 10.6% respectively, compared to 14.5% and 10.9% in Q2. Respondents across all sectors expected growth in total sales, with trading, manufacturing and agricultural companies being the most confident of it (with balances of responses of 25.2%, 22.3% and 19.6% respectively).

For two quarters running, respondents have reported a positive investment outlook for machinery, equipment and tools, the balance of responses being 8.8%, compared to 4.5% in Q2. At the same time, respondents continued to soften their still pessimistic expectations for construction investment, the balance of responses being (-2.2%), up from (-2.3%) in Q2.

Businesses that raise foreign investment continued to report expectations of investment growth over the next 12 months, the balance of responses being 7.1%, down from 15.3% in Q2. The firmest expectations were reported by energy and water supply, transport and communications and construction companies, with balances of responses of 62.5%, 25.0% and 25.0% respectively. The share of respondents who plan to raise foreign investment over the next 12 months was 24.2%, up from 23.1% in the previous survey.

Respondents reported stronger intentions to cut their workforces over the next 12 months, the balance of responses being (-7.0%), compared to (-3.8%) in Q2. Only trading companies declared intentions to hire more staff.

Respondents reported stronger expectations of a rise in wage costs per staff member, the balance of responses being 47.2%, compared to 44.6% in Q2.

With companies’ firmer expectations of an increase in their borrowing needs in the near future, the percentage of companies that plan to take out bank loans increased, to 36.1%, up from 34.8% in Q2.

Among companies that intended to take out loans, there was an increase in the share of those that preferred hryvnia loans, to 82.0%, up from 79.2% in Q2.

High loan rates remained the main factor deterring businesses from taking out new loans (49.1% of responses). The impact of collateral requirements increased, by 2.2 pp, to 31.1%.

The percentage of respondents who intend to take out foreign loans was 8.2%, up from 7.3% in the previous quarter. 


This survey was conducted from 31 July to 29 August 2023. A total of 652 companies in 21 oblasts took part in the survey (excluding the temporarily occupied territory of Crimea, as well as Donetsk, Luhansk and Kherson oblasts). Of the businesses polled, 21.5% were in wholesale and retail trade, 18.6% in manufacturing, 14.4% in agriculture, 12.9% in transport and communications, 7.2% in mining, 4.8% in energy and water supplies, 3.1% in construction, and 17.6% were in other sectors; 31.9% of the respondents were large companies, 38.7% medium companies, and 29.4% small companies. The findings presented reflect only the opinions of the respondents (top managers of Ukrainian companies), and should not be considered as NBU assessments.

The business outlook index is an aggregated indicator for companies’ performance expectations over the next 12 months. It is calculated as the arithmetic mean of the balances of responses regarding financial and economic standings, total sales of own products, investment spending on construction, investment spending on machinery, equipment and tools, and staff numbers. An index above 100 indicates that positive economic sentiment prevails in society, while an index below 100 shows that negative economic sentiment prevails.


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