Ukrainian businesses in the third quarter worsened expectations of inflation over the next 12 months to 25.2% from 21.7% in the previous quarter and worsened expectations of hryvnia devaluation to 41.93 UAH/$1 from 36.06 UAH/$1.
According to the results of the regular quarterly survey of business expectations of enterprises in the country, released on the NBU website on Monday, the business expectations index (BIE) of enterprises rose to 79.5 percent from 72.6 percent in the previous quarter, indicating a softening of negative economic sentiment.
The central bank explained that the increase was due to improved estimates for all components of the index, most notably for total sales of own-produced goods.
It is noted that companies expect a slowdown of decline in production of goods and services in Ukraine in the next 12 months: the balance of responses is “minus” 37.9% in the third quarter compared to “minus” 48.7% in the second quarter of 2022.
The majority of companies (52.4%) expect their financial and economic situation to remain unchanged in the next 12 months, 31.3% expect it to deteriorate and 16.2% expect it to improve.
According to the report, 31.7% of respondents expect a reduction in sales volumes (compared to 43% in the second quarter), including in foreign markets, while 44.4% expect the volumes to remain unchanged.
According to the survey, 32.9% of enterprises intend to reduce the number of employees, 59.7% – leave the staff unchanged.
Reduced expectations of companies to increase salaries of workers in the next 12 months: 41.4% of respondents plan to increase wages, 50.8% – to keep at current levels, 7.9% – to reduce.
The percentage of companies that plan to attract foreign investment fell to 22.2% from 24.1%, according to the survey.
Loans in local currency are planned to attract 86.3% of companies, while in the previous quarter this proportion was 84.6%.
A total of 642 companies from 21 regions participated in the survey of business expectations, which was conducted between 1st and 31st of August 2022. Among those surveyed, 18.2% were companies in the processing industry, 21.2% in wholesale and retail trade, 14.6% in agriculture, 13.2% in transport and communications, 6.4% in mining, 5.1% in electricity and water supply, 3% in construction and 18.2% in other sectors.
The EDI is an aggregate indicator regarding the expected development of enterprises in the next 12 months. Calculated based on the results of surveys of enterprises as an arithmetic means of the balances of responses regarding the financial and economic situation of enterprises, total sales of own production, investment spending on construction works, investment spending on machinery, equipment and inventory, and the number of employees.
An index value of more than 100 indicates an advantage of positive economic sentiment in society, below 100 – negative economic sentiment.
