Ukrainian companies remain upbeat about business activity over the next 12 months. The business outlook index for the next 12 months came in at 117.2%. As in previous surveys, a rebound in business activity is expected by companies across all sectors. The most optimistic forecast was given by respondents from manufacturing companies, as evidenced by the findings of the business outlook survey carried out in Q3 2018.
Economic activity keeps picking up at a high pace, largely due to respondents improving their forecasts for growth in total sales and investment in machinery, equipment and tools. Businesses across all sectors expect growth in investment spending over the next 12 months.
Companies continue to assess their financial and economic standings as good, while expecting an improvement over the next 12 months.
Along with that, respondents reported a low level of finished goods stocks, and said they expected production capacity shortages in the event of a sudden rise in demand.
Businesses continue to expect a pick-up in foreign investment. Respondents across all economic activities anticipate an increase in foreign investment, apart from agricultural companies. The most robust growth is expected by energy and water supply companies.
Respondents’ expectations of a rise in borrowing needs in the near future were little changed on the previous quarter, the balance of responses being 36.9%, up from 36.3% in Q2 2018. However, the share of respondents who plan to receive bank loans has been reducing for three quarters running. The percentage of respondents that intend to receive national currency loans remains high, at 82.2%.
Respondents said that high loan rates continued to be the main factor that deterred them from receiving new loans (69.1% of respondents).
Expectations for the output of Ukrainian goods and services over the next 12 months remain high across all sectors. Over 30% of respondents said that output would expand, with about 50% expecting output to remain unchanged. Respondents have been reporting positive expectations for ten quarters running.
Inflation expectations have decreased for two quarters in a row. Consumer prices are expected to increase by 8.9% (compared to 9.6% in Q2 2018). Respondents continue to cite the hryvnia exchange rate as the most important price driver (82.8% of responses). Although declining by 3.1 pp qoq, to 68.5%, production costs were ranked second in terms of importance.
Businesses said that over the next 12 months prices will be driven by household income and global prices.
For reference
This survey was conducted from 3 August through 4 September 2018. A total of 682 companies from 22 regions took part in the survey (excluding the temporarily occupied territory of Crimea, as well as Donetsk and Luhansk oblasts). The respondents were chosen to represent a range of main economic activities, types of ownership, and sizes based on staff numbers. This survey only reflects the opinions of respondents (managers of Ukrainian companies), and does not represent NBU forecasts or estimates.