The index of business expectations (IDO) of enterprises in Ukraine decreased from 109.2% compared to 108.7 percent.
The national Bank of Ukraine (NBU) conducts a quarterly survey “Business expectations of enterprises.” Surveys within the last one – for the fourth quarter and was held from 8 November to 8 December, but the results have been published only recently.
In General over the next 12 months are expected to:
- the growth of production of goods and services: balance of expectations rose to 11.1% (in the third quarter was 5.4 per cent);
- the growth of consumer prices – 16,2% (in the third quarter was expected 13,8%);
- the strengthening process of the devaluation of the average exchange rate of hryvnia to the dollar -29,16 (III sq – 28,03);
- the decline in business activity: IDO decreased to 108.7 percent (109,2%);
- growth in the demand for borrowed funds, businesses planning to take Bank loans mainly in local currency.
The main negative factors for the development of enterprises also remain unstable political situation and high energy prices.
Expectations regarding changes in the volume of production of goods and services in the next 12 months, %
The first quarter
II sq
III sq
IV sq
Increase
17,8
24,8
27,1
29,9
Reduced
36,4
22,7
21,7
18,8
Will not change
45,8
52,4
51,2
51,3
Economic activity. Improved expectations in the activities except construction, transport and communications. The balance of expectations concerning the release of goods and services rose to 11.1% (in the third quarter was 5.4 percent). The share of respondents who expect a decrease in production volumes, decreased to 18.8%, its lowest level over the past five years.
The growth in production volumes expect:
- by types of economic activity: trade, energy, water, processing industry and agriculture;
- by region: предприятия14 areas of greatest optimism in the Rivne and Transcarpathian regions (as in the previous quarter).
The decrease in production volumes forecasted by the respondents of the five areas, most of the pessimism in Chernihiv and Mykolaiv regions.
The recovery expected by the respondents of all economic activities. The most optimistic forecasts at the enterprises of processing industry (IDO – 114,1%), energy and water (111,7%) and trade (111%).
Dynamics of components of IDO enterprises of Ukraine in 2016
Expectations of respondents for the next 12 months for:
The balance of responses, %
I sq
II sq
II. sq.
IV sq
the economic and financial condition
-0,9
12,1
10,4
8,2
the sales volumes
4,9
19,4
18,3
17,7
of investrashodov for construction works
-7,9
1,9
5,0
4,5
spending on machinery, equipment and supplies
2,1
9,3
11,5
17,2
the number of employees
-6,2
-0,1
0,9
-4,3
Increased estimates of future investment spending on machinery, equipment and tools at enterprises. High scores respondents gave higher overall sales volumes. Renewed expectations of a reduction in the number of employees in enterprises.
Respondents for the third consecutive quarter appreciate the growth prospects of the total sales volumes of their enterprises: the balance of expectations of 17.7% (up 18.3 percent). High marks from pererabatyvaemogo enterprises (balance of responses 25.0 per cent). Enterprise construction continues prognozirovaniye total sales volumes.In the foreign market expect increase of volumes of realization of products (services) in almost all businesses.
Inflation expectations. It is expected the growth of consumer prices by 16.2% (in the third quarter was 13.8 per cent). The number of those (50,4%), who predicts that consumer prices will not exceed 15% (61,1%). Among the factors influencing the assessment of inflation, significantly increased the importance of income and social expenditures.
The perception of factors influencing the evaluation of changes in the level of potrebitelskie, % of responses
The first quarter
II sq
III sq
IV sq
The hryvnia exchange rate
87,6
76,7
81,8
81,5
Production costs
57,1
66,5
61,3
69,4
Incomes
17,9
19,2
16,0
28,0
Tax changes
21,9
20,6
17,2
19,8
The social spending budget
9,0
13,2
9,1
16,6
Prices on world markets
10,9
15,5
13,7
14,1
The dynamics of the availability of money in the economy
12,5
10,7
11,8
9,1
The hryvnia. Devaluation expectations increased slightly, the majority of respondents (65.6 per cent) hope that the exchange rate of hryvnia to the dollar in the next 12 months will be in the range of 26 – 30 (in the second quarter there were 68,4%) but significantly increased the share of those expecting the growth rate over the 30 – 30,4% (was 17.2 per cent). The average expected value rate amounted to 29.16 (28,03).
In the period of the survey, the average rate on the interbank foreign exchange market was, on average 25,78 UAH. Daily fluctuations do not exceed 3% of the average. At the time of the survey in the third quarter the average rate was UAH 25,78, daily oscillations reached 8%.
The state enterprises. Assess the current financial and economic state of enterprises improved. The balance of answers increased to 2.3% (in the third quarter was 1.2%).
The respondents ‘ answers to the question “How do you assess financial and economic standing of their enterprises amoment survey?”, %
The first quarter
II sq
III sq
IV sq
Good
13,1
15,1
18,2
16,9
Satisfactory
65,6
67,0
64,8
68,5
Bad
21,2
17,9
17,0
14,6
Appreciated their financial and economic standing:
- by types of economic activity: enterprises of agriculture, processing industry and trade;
- size: large and medium;
- by regions – enterprises 13 regions, the highest marks in Mykolayiv and Khmelnytsky regions.
Low are azenterprise of transport and communication, energy and water, and the regions of Zaporizhzhya and Poltava regions.
The level of inventories of finished products are below the desired estimate for the twelfth consecutive quarter. The balance of assessments increased to minus 10.6 per cent (from minus 7.5% in the previous quarter). While respondents processing industry for the first time in 2016, assessed their stocks of finished products as below desired balance minus 7.3 percent (7.4 percent). Decreased assessment of the level of stocks of finished products in the mining industry. These estimates correspond to the data of the state statistics about the decrease in production volumes in this industry in January-октябре2016.
Respondents note a decrease in production capacity for the second consecutive quarter. The balance of estimations decreased to 1.6% (was 6.1%).The proportion of respondents who, in the case of increasing demand, will work at the limit of their production capacity (50,0%) or to require additional capacity (24,2%) (was 47.7 and 23.1%, respectively).
The respondents from agricultural enterprises continue to celebrate the lack of available production capacity, which can be attributed to seasonal factors. The large reserves of production capacities of the enterprises of energy and water.
Investment expectations. Respondents raised estimates of growth in spending on machinery, equipment inventory in the next 12 months: balance of answers of 17.2% (was 11.5%). Expectations for an increase of investment expenditures for construction laborpraktikum remained at the level of the previous quarter: the balance of responses is 4.5% (was 5%). The increase in investment spending in their companies in the next 12 months videotranny the vast majority of economic activities.
It is expected the increase of foreign investment – balance of responses is 15.6 per cent (15.8 per cent). The proportion of respondents that in the next 12 months plan to attract foreign investment, 21.7 per cent (22.6 per cent). The sure increase in foreign investment remains companies energy and water supply.
Production. The most significant factor limiting the ability of enterprises to increase production, the respondents believe that high energy prices. Has significantly increased the role of factors such as fluctuation rate, too high prices for raw materials and pressure on business tax and regulatory. In this respect, the situation for the quarter has changed markedly for the worse.
The perception of the factors limiting the ability of enterprises to increase production, % of responses
The first quarter
II sq
III sq
IV sq
Too high energy prices
45,3
45,7
42,9
50,6
The unstable political situation
50,8
46,1
44,5
45,0
Significant fluctuations of the hryvnia
53,3
42,5
40,5
43,1
Too high prices for raw materials
40,4
42,0
40,2
42,2
Excessive tax pressure
36,3
35,9
32,9
36,4
Insufficient demand
31,3
33,2
32,8
30,1
Lack of funds
33,7
32,1
30,8
31,1
An excessive regulatory pressure
16,1
16,6
15,5
17,0
The shortage of skilled workers
10,6
12,0
16,6
16,0
Corruption
18,3
16,0
15,9
15,4
The limited productive capacity
11,3
10,2
13,4
13,3
Limited opportunities for credit
15,6
13,9
13,9
12,8
The expected acceleration of price growth as purchase goods and services and products sobstvennosti: balance of answers and 92,1 71,3% (up to 88.1 and 59.7 per cent). Expectations regarding the growth of prices for purchased products has intensified for the respondents from most types of economic activity, most of the extractive industry (balance of responses – 93,3%, an increase of 9.2 percentage points) and trade (92,1%, an increase of 8.7 percentage points).
Most of all the rise in price of products of own production will affect energy prices, exchange rate and prices of raw materials. Compared to the previous quarter is expected to strengthen their influence. Will also significantly increase pressure cost of labour resources – an increase of 12.3 PP
The factors influencing the level of producer prices, % of responses
The first quarter
II sq
III square.
IV sq
Energy prices
57,8
62,1
63,7
69,4
The hryvnia exchange rate
68,3
55,5
59,7
62,0
Prices for raw materials
58,7
59,3
58,5
61,3
The labor cost
25,9
31,3
34,8
47,1
The tax burden
23,4
24,6
18,5
22,9
The demand for the products
14,5
13,8
15,5
13,6
Competition
13,6
14,6
13,4
15,1
Prices on world markets
11,0
11.1 V
12,3
13,0
The level of interest rates on loans
11,5
12,0
10,8
11,9
Pay. Expectations for increased spending on salaries of hired RABOTNIKOV increased considerably, the balance of replies of 71.7% against 56.2 per cent in the last quarter. The highest expectations – agricultural enterprises. The lowest – processing industry enterprises (balance of responses of 82.1%).
Finance. Expectations regarding growth in the demand for borrowed funds increased slightly: the balance of answers of 33.5% (32.4 per cent). This will reduce the number of those who plan to borrow – to 34.6% (36.7 per cent).
The vast majority are planning to take loans in the national currency – for 84.4% (84,3%). Foreign currency can take loans mainly to enterprises of transport and communication (28%), large enterprises (29.2%) and conducting export and import operations (29.7 percent).
An obstacle to attracting new loans, the respondents most often referred to as the stakes are too high to 68.3% (up 67.6% of the answers) and excessive requirements to collateral, at 37.2% (up 35.7 percent).Again increased the impact of exchange rate factor to 32.1% versus 30.3%.
Keep interest in the loans:
- the presence of other sources of funding (most of this applies to the extractive industry);
- uncertainty in the ability to timely meet its debt obligations (of enterprises of transport and energy and water supply).
Continues to grow the share of enterprises claiming that they have no problems with banking operations – is now 94% versus 92.4 per cent.So, it is possible that the quality of the banks really improved.
