The index of business expectations of Ukrainian enterprises in the second quarter increased to 114.3% from 113,3% and 108,7% in the previous two quarters. But keep in mind that the survey was conducted before the June cyber attack, which many companies suffered badly.
Respondents expect growth of production volumes of goods and services in the next 12 months – the balance of expectations 14.2% (in I quarter was 6.1%). Growth expect businesses of all main activities (except mining industry) and of all sizes. However, the share of outstanding growth fell by 10.3 p. p.
Optimists represent eight regions of the country, most of them in Lviv and Khmelnytsky regions. The decline mostly in Odessa and Volyn oblasts.
Expectations regarding changes in the volume of production of goods and services in the next 12 months, %
2016
2017
The first quarter
II sq
The third quarter
IV sq
The first quarter
II sq
Increase
17,8
24,8
27,1
29,9
38,7
28,4
Reduced
36,4
22,7
21,7
18,8
11,0
14,2
Will not change
45,8
52,4
51,2
51,3
50,3
57,4
Economic activity. The index of business expectations (IDO) was increased to 114.3% (in I quarter – 113,3%). Third consecutive quarter of increased business activity expected by the respondents of all economic activities. The most optimistic forecasts of the enterprises of agriculture (IDO – 120,6%), trade (118,8%) and processing industry (118,3%).
Increased estimates of future investment costs, financial and economic state of enterprises and number of employees. High valuation relative to the growth of overall sales volumes and investment spending on the acquisition of machinery, equipment and inventory. The increase in the number of employees in their enterprises the respondents expect second quarter in a row.
The revival of economic activity expect respondents in 20 regions. The highest expectations for the respondents from Vinnytsia (IDO – 131,8%) and Lviv (131,0%) regions. The decline in economic activity of their enterprises predict only respondents in Zhytomyr (IDO – 98%) and Dnipropetrovsk (99%) regions.
Dynamics of components of IDO enterprises of Ukraine, balance of answers, %
Expectations of respondents for the next 12 months for:
2016
2017
The first quarter
II sq
The third quarter
IV sq
The first quarter
II sq
the economic and financial condition
-0,9
12,1
10,4
8,2
15,2
17,6
the sales volumes
4,9
19,4
18,3
17,7
27,7
25,2
of investrashodov to conduct builds. works
-7,9
1,9
5,0
4,5
6,2
7,8
spending on machinery, equipment and supplies
2,1
9,3
11,5
17,2
16,5
18,7
the number of employees
-6,2
-0,1
0,9
-4,3
1,8
2,3
Expectations for growth of costs per production unit decreased, the balance of answers is 55,8% (in the first quarter at 63.5%). The highest expectations for the respondents from construction (78,6%), large companies (61,4%) and the enterprises performing only import transactions (63,8%), by regions – enterprises in Khmelnytskyi region (94.4 per cent).
The main factor influencing the growth of prices – the cost of production. For the first time since 2014 the impact of exchange rate factor has dropped to second place
Inflation expectations – expected consumer price growth of 9.9% (in the first quarter to 15.6%).The proportion of respondents who predict that the growth of consumer prices in the next 12 months will not exceed 9.0 per cent or lower, is 4.8%.
The main factor influencing the growth of prices – production costs (70.5 per cent).For the first time since the first quarter of 2014, the impact of exchange rate factor has dropped in incinerators on the second place – this was the result of a relative stabilization of the exchange rate. Significantly weakened the impact of tax changes.Least on the consumer price index will affect the dynamics of the money supply in the economy. Significantly increased concerns that the growth of social spending will lead to inflation.
The perception of factors influencing the evaluation of changes in the level of consumer prices, % of responses
2016
2017
The first quarter
II sq
The third quarter
IV sq
The first quarter
II sq
Production costs
57,1
66,5
61,3
69,4
70,9
70,5
The hryvnia exchange rate
87,6
76,7
81,8
81,5
77,9
66,6
Incomes
17,9
19,2
16,0
28,0
25,1
25,8
Tax changes
21,9
20,6
17,2
19,8
30,9
21,4
The social spending budget
9,0
13,2
9,1
16,6
15,8
19,5
Prices on world markets
10,9
15,5
13,7
14,1
13,4
13,9
The dynamics of the availability of money in the economy
12,5
10,7
11,8
9,1
8,0
10,0
The hryvnia exchange rate. The majority of respondents (57.8 per cent) predicts that the exchange rate in the next 12 months will be in the range 26-29 UAH./$ . (in the first quarter was 36.6 percent). The expected average value of the rate – 28,68 UAH. (in the first quarter – of 29.44 UAH).The proportion of respondents who think that the rate will remain unchanged or will rise, the hryvnia, has almost doubled to 24.6% (in the first quarter, 13.5 percent).
I should say that in the period of the survey, the average rate on the interbank market was an average of 26.33 UAH. and daily fluctuations did not exceed 1.3% of the average value (in the first quarter – UAH respectively to 27.06. and 1.2%).
The state enterprises. Respondents assess positively the current financial and economic standing of their enterprises for the fourth consecutive quarter. The balance of answers increased to 6.1% (in the first quarter and 2.3%).Appreciated his position respondentsintegrity agriculture, processing industry and trade. By regions – enterprises from 17 regions, above all in Chernivtsi and Rivne regions.The lowest is the assessment of energy and water, transport and communication by regions – in the Zaporozhye and Kharkov areas.
The respondents ‘ answers to the question “How do you assess financial and economic standing of their enterprises amoment survey?”, %
2016
2017
The first quarter
II sq
The third quarter
IV sq
The first quarter
II sq
Good
13,1
15,1
18,2
16,9
16,2
19,7
Satisfactory
65,6
67,0
64,8
68,5
69,8
66,7
Bad
21,2
17,9
17,0
14,6
13,9
13,6
Respondents expect improvement of the financial and economic state of their enterprises – the balance of expectations at 17.6% (in the first quarter by 15.2%). The highest expectations from trade enterprises (balance of 28.3%) and lowest in mining (4.8 percent).
Enterprise fifth consecutive quarter appreciate the prospects for growth of product sales volume, although their optimism has decreased slightly: the balance of expectations was 25.2% (in the first quarter of 27.7 per cent).The highest rating of the enterprises of agriculture and trade (balances of answers to 40.0% and 33.3%).
The level of inventories of finished products, the respondents continue to rate as lower than normal. The negative balance of assessments increased to minus 14.3 per cent (in I quarter – minus 6.5 per cent), it reached its lowest level during the whole period of surveys.
The decrease in the resources production capacity – the balance of estimations decreased to 1.1% (the first quarter – 3.1%). The share of respondents that can meet a sudden increase in the demand not working at full capacity, decreased to 24.7% (in I quarter – 26.2 percent).The largest reserves of production capacities at the enterprises of energy and water.The greatest shortage of available production capacity among the respondents of agriculture.
Raised expectations regarding the increase in the number of employees at enterprises in the next 12 months – the balance of expectations rose to 2.3% (in the first quarter to 1.8%).The increase in the number of employees is expected at the enterprises of construction, processing industry and trade, by regions – 11 regions, mostly in Vinnytsia.Expected change in number of employees in enterprises of agriculture.
Investment expectations. Remain positive expectation of future investment. Increased expectations for growth in spending on machinery, equipment and supplies in the next 12 months: balance of answers to 18.7% (in the first quarter to 15.5%).It is also expected to increase investment expenditure on construction work: the balance of responses was 7.8% (first quarter at 6.2%).
The increase in investment in machinery, equipment and inventory forecast by the respondents of all economic activities, most of the enterprises of transport and communication (balance of 33.8%). The highest expectations of growth of investments in construction works, as in the previous quarter, the companies energy and water supply (balance of 34.4%).
Continued increase in the volume of foreign investment – balance of responses and 10.3% (first quarter – 6,0%). The proportion of respondents that in the next 12 months plan to attract foreign investments, amounts to 23.7% (in the first quarter and 22.4%).
Production. The most important factors limiting the ability of enterprises to increase production – too high prices for energy and raw materials.Significantly decreased assessment of the adverse impact on the production rate factor. It should be noted that significantly increased assess the importance of factors such as limited production capacity and difficulties in obtaining loans.
The perception of the factors limiting the ability of enterprises to increase production, % of responses
2016
2017
The first quarter
II sq
The third quarter
IV sq
The first quarter
II sq
Too high energy prices
45,3
45,7
42,9
50,6
50,5
46,2
Too high prices for raw materials
40,4
42,0
40,2
42,2
45,0
39,9
The unstable political situation
50,8
46,1
44,5
45,0
43,2
35,8
Lack of funds
33,7
32,1
30,8
31,1
31,9
34,2
Excessive tax pressure
36,3
35,9
32,9
36,4
37,4
32,5
Significant fluctuations of the hryvnia
53,3
42,5
40,5
43,1
40,0
30,6
Insufficient demand
31,3
33,2
32,8
30,1
24,4
27,1
The shortage of skilled workers
10,6
12,0
16,6
16,0
18,1
18,7
An excessive regulatory pressure
16,1
16,6
15,5
17,0
17,5
17,2
Limited opportunities for credit
15,6
13,9
13,9
12,8
12,9
16,3
Corruption
18,3
16,0
15,9
15,4
16,5
16,0
The limited productive capacity
11,3
10,2
13,4
13,3
13,2
15,1
Respondents for the second consecutive quarter lowered their estimates for price growth as purchase goods and services and own products in the next 12 months: balance of answers for 84.7 and 58,8% (I, sq – 91,3 and 69.6%, respectively).The highest expectations for price growth as purchase products and products of own manufacture of the enterprises of construction, as well as energy and water.
Most of the increase in own production will affect the price of energy and raw materials. Reduced estimates of the impact of exchange rate factor.The least impact on selling prices, as in the previous quarter, will exercise the level of interest rates on loans.
The factors influencing the level of producer prices, % of responses
2016
2017
The first quarter
II sq
The third quarter
IV sq
The first quarter
Energy prices
57,8
62,1
63,7
69,4
68,9
65,8
Prices for raw materials
58,7
59,3
58,5
61,3
61,4
The 61.8
The hryvnia exchange rate
68,3
55,5
59,7
62,0
60,8
51,9
The labor cost
25,9
31,3
34,8
47,1
51,0
48,6
The tax burden
23,4
24,6
18,5
22,9
21,7
19,5
Prices on world markets
11,0
11.1 V
12,3
13,0
12,2
15,4
Competition
13,6
14,6
13,4
15,1
10,7
12,9
The demand for the products
14,5
13,8
15,5
13,6
10,4
12,6
The level of interest rates on loans
11,5
12,0
10,8
11,9
8,0
10,3
Wages. Expectations for increasing future expenses for payment of labor of one employee weakened the balance of answers of 60.2% (in the first quarter compared to 68.1%). The lowest expectations
by kinds of economic activities – enterprises in mining;in size – from small enterprises;in the direction of activities of the enterprises that do not perform export and import operations;by regions – enterprises in Chernivtsi region.The highest ozhidaniya agricultural enterprises and enterprises performing only export transactions.
Finance. Respondents for the third consecutive quarter to increase their expectations for growth in the demand for borrowing in the near future: the balance of responses of 38.5% (in the first quarter to 36.7%).The greatest need for borrowing – from construction enterprises (balance of responses – 61,5%); the size – from large enterprises (41.9 per cent).
The share of respondents that plan to take loans, increased to 38.2% (– 34%).Most plan to take creditability processing industry (54% of answers). The proportion of those who are going to attract funds from abroad, declined to 7.1% (in the first quarter to 8.1%).Increased the proportion planning to take loans in the national currency – was 85.6%.
A major obstacle to attracting new loans is still too high interest rates on loans (67.5% of responses).Significant factors:for companies energy and water supply – lack of confidence in ability to perform timely debt (33.3% of answers);for enterprises construction – other financing sources (32,1%).The balance of assessments of the rigidity of credit conditions decreased to 22.8% (in the first quarter of 27.7 per cent).
The proportion of respondents who said about the absence of problems with Bank operations, amounted to 93,1%. This is 1 percentage point less than in the previous quarter.
The national Bank of Ukraine (NBU) conducts a quarterly survey “Business expectations of enterprises.” Surveys within the last one – for the II quarter was conducted from 11 may to 9 Jun, published July 13.
