Business has improved its expectations regarding future activity – NBU

Representatives of Ukrainian business in the first quarter of the year softened negative expectations regarding their own business activity.

This is evidenced by the results of a survey of company managers, will conduct National Bank.

The index of business expectations of enterprises (IBO) increased to 91.2% compared to 83.5% in the 4th quarter of last year. The improvement in ratings applied to almost all industries except construction and trade, as well as to all components of the index.

The business significantly softened expectations regarding production volumes in Ukraine next year: the balance of responses was “minus” 16.7% compared to “minus” 32.3% in the IV quarter.

Inflation expectations have also improved: in the first quarter, expected annual inflation was 20.7% compared to 23.3% in the previous quarter. Almost half of the surveyed enterprises believe that inflation in the next 12 months will not exceed 20%.

In addition, business expects a slight weakening of the devaluation of the hryvnia. On average, they expect that in a year the exchange rate will be UAH 42.18 per dollar (in the IV quarter – UAH 42.59/dollar). At the same time, almost half of the respondents expect that the hryvnia exchange rate will not exceed UAH 42/dollar in the next 12 months.

Despite the long-term softening of respondents’ assessments of the current economic condition of their own enterprises, the overall assessment remains negative: the balance of responses was “minus” 16.9% compared to “minus” 19.3% in the IV quarter.

At the same time, expectations regarding changes in the state of enterprises have approached the equilibrium level: the balance of responses is “minus” 2.5% (in the IV quarter – “minus” 11.5%).

Thus, mining industry enterprises expect improvement in the next 12 months; no changes are expected in agriculture; the rest of the respondents softened their negative expectations – with the exception of construction enterprises.

For the first time in a year, respondents expect an increase in sales volumes, particularly in the foreign market. Respondents in most areas expect an increase in total sales volumes, most notably in the processing and mining industry. Negative ratings remain in construction, energy and water supply.

For the second quarter in a row, enterprises attracting foreign investments expect an increase in their volumes in the next 12 months. At the same time, the share of respondents who plan to attract foreign investments in the next 12 months has slightly decreased and is 21.3% compared to 22.8% in the previous survey.

Respondents of enterprises of all types of activity expect a decrease in the number of employees, while for the third consecutive quarter they forecast lower rates of reductions. Enterprises in the extractive industry and agro-industrial complex softened their estimates the most, construction enterprises have the most pessimistic expectations.

The share of enterprises planning to raise loans in the national currency has decreased somewhat, but remains the predominant share – 79.7% compared to 84.9% in the IV quarter. The most significant obstacle to attracting new loans remains high interest rates, but the factor of complexity of the document processing procedure has increased.

The share of companies planning to raise funds abroad slightly decreased to 7.4% compared to 7.8% in the previous quarter.