Businesses had gloomy expectations of their economic performance in June due to the continued hostilities in the war with russia, destroyed capacities, disrupted supply chains, blocked ports, damaged transportation infrastructure, higher energy prices, rising productions costs, and worsening inflation expectations.
This is evidenced by the business activity expectations index (BAEI), which the NBU started calculating again following a forced three-month hiatus. In June 2022, the index was 41.3, compared to the equilibrium level of 50.0.
In June, companies across all of the surveyed sectors reported negative expectations of their economic outlook in the near future.
Industrial companies were downbeat about their economic performance in the wake of destroyed industrial capacities, falling demand, the loss of orders, and disrupted logistics – the sector’s DI was 43.7. Respondents expected a decrease in the amount of manufactured goods and the number of new orders for products, including export orders. At the same time, respondents expected a decrease in their finished goods stocks, due to declining output and the loss of some warehouses.
After virtually ceasing operations at the launch of the full-scale war, in June, construction companies somewhat resumed operations. In spite of that, they are still pessimistic about their performance, the sector’s DI being 40.1. Respondents had dim expectations for construction volumes, the number of new orders, and purchases of raw materials and supplies.
With logistical problems, the loss of markets and the destruction of warehouses, trading companies also reported negative expectations, with a DI of 43.4. Respondents expected a decline in their trade turnover, a decrease in the amount of goods purchased for sale, and a drop in their stocks of goods for sale. Trading companies said they intended to cut their trade margins.
Services companies reported the most pessimistic performance expectations compared to other surveyed sectors, with a DI of 37.7. The reasons for this were damaged transportation infrastructure, disrupted logistics, a ban imposed on air travel in Ukraine, destroyed services facilities and weaker demand.
Companies across all of the surveyed sectors reported intentions to raise their selling prices on the back of significantly higher raw material and supplies prices.
Staff expectations were also gloomy. On the back of mobilization and migration, respondents across all sectors expected reductions in their workforces.
Nevertheless, in spite of the war, the Ukrainian economy continues to operate. The estimated economic decline in June 2022 – the value of the BAEI index – is comparable to the March 2020 figure, the month the Covid-19 broke out.
This survey was carried out from 2 June through 21 June 2022. A total of 417 companies were polled. Of the companies polled, 45.3% are industrial companies, 28.3% services companies, 21.8% trading companies, and 4.6% construction companies; 31.7% of the respondents are large companies, 31.9% medium companies, and 36.5% small companies.
Of the companies surveyed, 32.9% are both exporters and importers, 9.8% are exporters only, 14.4% are importers only, and 42.9% are neither exporters nor importers.
The findings presented reflect only the opinions of the respondents (top managers of Ukrainian companies), and should not be considered as NBU forecasts or assessments.
The business activity expectations index (BAEI) is a tool for conducting latest assessments and detecting trends in economic development. It is calculated on the basis of surveys of Ukrainian real sector companies.
Monthly business activity expectations indices are calculated on the basis of respondents’ replies. These indices are as follows: sectoral indices (for each sector of the economy) and a composite index (describes the country’s economic development over a month). A value of 50 corresponds to the neutral level. Index values above the neutral level indicate positive expectations.
Read more about the June 2022 survey in the Monthly Surveys of Companies Subsection of the Publications Section on the NBU’s official website.
The NBU has started posting monthly survey results in the open data format.
The results of the next survey (for July) will be published on the first business day of August 2022.