The national Bank of Ukraine (NBU) conducts a quarterly survey “Business expectations of enterprises.” Surveys within the last one – for the first quarter – was conducted from 7 February to 6 March, published on April 13.
Thus, the index of business expectations (IDO) businesses for the quarter increased to 113.3% from 108.7 percent.
Respondents have improved expectations for the macroeconomic situation in Ukraine and
the development of their businesses in the next 12 months. In General, it is expected:
- the continuation of growth in production of goods and services, although this confidence declined slightly: the balance of expectations of 6.1% (IV quarter of 2016 – 11,1%);
- business recovery: IDO increased to 113.3% (q IV – 108,7%). The growth index was mainly due to the increase of the forecasts relative to total sales volumes, the economic and financial condition of enterprises, as well as the restoration of expectations on the increase in the number of employees;
- a slowdown in the rate of inflation – consumer price growth of 15.6% (q IV – 16,2%);
- a slight strengthening of the process of the devaluation of the average exchange rate
- Of 29.44 UAH/USD. (IV quarter amounted to 29.16 UAH.);
- growth in the demand for borrowed funds. The companies plan to take Bank
- loans mainly in the national currency.
The main negative factors for the development of enterprises remain too high energy prices, raw materials.
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
Increase
17,8
24,8
27,1
29,9
38,7
Reduced
36,4
22,7
21,7
18,8
11,0
Will not change
45,8
52,4
51,2
51,3
50,3
Economic activity. Business recovery expected by the respondents of all economic activities. The most optimistic forecasts of the enterprises of transport and communication (IDO – 118,6%) and processing industry (118,3%).
Increased estimates of future sales volumes of own production, financial and economic state of enterprises, number of workers and the investment costs for the construction work in their enterprises. High valuation relative to the growth of overall sales volumes and investment spending on the acquisition of machinery, equipment and inventory. Renewed expectations of an increase in the number of employees in their enterprises.
Recovery expected in 21 regions. The best hope in Lviv (IDO – 127,3%) and Volyn (123,2%). The decline in economic activity of their enterprises continue to forecast only in the Kherson region.
The growth in production volumes expect:
- by types of economic activity – manufacturing industries, energy, water, trade;
- by regions – enterprises 13 regions, most of all, Rivne and Zakarpattya.
The decrease in production volumes forecast by: types of economic activity the respondents from extractive industries, agriculture, transport and communications, construction; by regions – Mykolaiv, Sumy, Zhytomyr, Odesa, Kherson, Ternopil and Kirovohrad regions.
Dynamics of components of IDO enterprises of Ukraine in 2016, the balance of responses, %
Expectations of respondents for the next 12 months for:
2016
2017
The first quarter
II sq
The third quarter
IV sq
The first quarter
the economic and financial condition
-0,9
12,1
10,4
8,2
15,2
the sales volumes
4,9
19,4
18,3
17,7
27,7
of investrashodov to conduct builds. works
-7,9
1,9
5,0
4,5
6,2
spending on machinery, equipment and supplies
2,1
9,3
11,5
17,2
16,5
the number of employees
-6,2
-0,1
0,9
-4,3
1,8
Respondents fourth consecutive quarter appreciate the growth prospects of the common
the sales volumes of their enterprises and greatly increased assessment: the balance of expectations 27.7 per cent against 17.7 per cent. Predict the growth of enterprises of all economic activities, the highest rating in the processing industry and trade.
Renewed expectations of an increase in the number of employees at their enterprises in the next 12 months, the balance of expectations rose to 1.8% (q IV –
minus 4.3 per cent). The increase in the number of employees is expected at the enterprises of construction, processing industry and trade. The decrease forecasted by the respondents of enterprises of energy and water supply, mining, agriculture, and transport and communications.
Expectations for growth of costs per unit of output remained at the level
in the previous quarter, the balance of answers was 63.5% (q IV – 63.1 per cent). High expectations here for the respondents from processing industry (balance of replies to 81.2%).
Inflation expectations weakened amid slight strengthening of devaluation expectations. It is expected consumer price growth of 15.6% (IV quarter and 16.2%). The proportion of respondents (54,0%), which predict that consumer prices will not exceed 15%, or they will fall (fourth quarter and 50.7 per cent).
The main factors for higher prices remain, the exchange rate and production costs, at the same time you expect some weakening of the influence of hryvnia exchange rate (decrease by 3.6 p. p.). Will greatly increase the impact of tax changes (an increase of 10.4 PP). Least on the consumer price index will affect the dynamics of the money supply in the economy (a decrease of 1.1 percentage points).
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
The hryvnia exchange rate
87,6
76,7
81,8
81,5
77,9
Production costs
57,1
66,5
61,3
69,4
70,9
Incomes
17,9
19,2
16,0
28,0
25,1
Tax changes
21,9
20,6
17,2
19,8
30,9
The social spending budget
9,0
13,2
9,1
16,6
15,8
Prices on world markets
10,9
15,5
13,7
14,1
13,4
The dynamics of the availability of money in the economy
12,5
10,7
11,8
9,1
8,0
The hryvnia. Most of the respondents (63,5%) consider that the exchange rate in the next 12 months will be in the range 27 to 30 UAH. The average value of 29.44 UAH. (IV quarter amounted to 29.16). The share of respondents who expect devaluation of the hryvnia in the next 12 months, decreased to 86.5% (q IV – 89,0%).
It should be noted that in the survey period average weighted rate on the interbank foreign exchange market was UAH to 27.06. Daily fluctuations do not exceed 1.2% (in IV quarter – 25,78 UAH. fluctuations within 3%).
The state enterprises. Respondents assess positively the current financial and economic standing of their enterprises for the third consecutive quarter – the balance of answers remained at the level of the previous quarter and 2.3%.
The respondents ‘ answers to the question “How do you assess financial and economic standing of their enterprises at the time of the survey?”, %
2016
2017
The first quarter
II sq
The third quarter
IV sq
The first quarter
Good
13,1
15,1
18,2
16,9
16,2
Satisfactory
65,6
67,0
64,8
68,5
69,8
Bad
21,2
17,9
17,0
14,6
13,9
Appreciated your financial situation:
- by types of economic activity – the enterprises of agriculture, trade and processing industry;
- by regions – enterprises of 11 provinces, above all, Volyn and Kherson.
Low are the scores of the respondents on types of economic activities enterprises energy and water supply and construction in the regions of Odessa and Zaporizhia regions.
Respondents continued to expect improvement in financial and economic state of their enterprises: the balance of expectations rose to 15.2% (IV quarter at 8.2%). Increased assessment and expect the improvement of the enterprises of all economic activities, except agriculture. High expectations from trade and the mining industry (balances of responses of 22.8% and 22.5%, respectively) and the lowest for the respondents from agriculture (minus 1.3 percent).
The level of inventories of finished products, the respondents continued to assess lower than normal for the thirteenth consecutive quarter. However, the negative balance of assessments fell to minus 6.5 percent (fourth quarter – minus 10.6 percent). Higher than normal assess the level of reserves only respondents processing industry. Significantly reduced assessment of the level of stocks of finished products and agricultural enterprises, which can be explained by seasonal factors.
Respondents noted the increased resources production capacity. the balance of assessments
increased to 3.1 percent (fourth quarter to 1.6%). The share of enterprises, which in the case of an increase in demand will work to the limit of their capacities remained at the level of the previous quarter (50.7 per cent), and the proportion in need of attraction of additional capacities decreased to 23.1% (q IV – 24,2%). The large reserves of production capacities of the enterprises of energy and water supply (balance of responses – 50,0%). The greatest shortage of available production capacity reported by respondents in agriculture (the balance of answers – minus 32.9 percent).
Investment expectations. Respondents expect the growth of spending on machinery, equipment and inventory in the next 12 months: balance of answers is 15.5% (q IV% to 17.2%). Increased expectations for an increase of investment costs of
construction works: balance of answers is 6.2% (fourth quarter to 4.5%).
Slightly decreased the hopes for growth of volumes of foreign investments: balance of answers
6.0 percent (fourth quarter to 15.6%). However, the share of enterprises that in the next 12 months are going to attract foreign investment, increased slightly: a total of 22.4% compared to 21.7%. The greatest growth of volume of foreign investments the respondents expect the enterprises of transport and communication, energy and water. Do not expect a change of the enterprise in the agriculture, construction and trade. The decrease in foreign investment is predicted in mining and processing industry.
Production. Too high energy prices, raw materials are the most important factors limiting the ability of enterprises to increase production. Reduced estimates of the negative impact on production rate factor (decrease by 3.1 p. p.) and insufficient demand (decrease by 5.7 p. p.).
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
Too high energy prices
45,3
45,7
42,9
50,6
50,5
The unstable political situation
50,8
46,1
44,5
45,0
43,2
Significant fluctuations of the hryvnia
53,3
42,5
40,5
43,1
40,0
Too high prices for raw materials
40,4
42,0
40,2
42,2
45,0
Excessive tax pressure
36,3
35,9
32,9
36,4
37,4
Insufficient demand
31,3
33,2
32,8
30,1
24,4
Lack of funds
33,7
32,1
30,8
31,1
31,9
An excessive regulatory pressure
16,1
16,6
15,5
17,0
17,5
The shortage of skilled workers
10,6
12,0
16,6
16,0
18,1
Corruption
18,3
16,0
15,9
15,4
16,5
The limited productive capacity
11,3
10,2
13,4
13,3
13,2
Limited opportunities for credit
15,6
13,9
13,9
12,8
12,9
It is expected the increase of prices of purchased goods and services and the products of their own
production: the balances of responses of 91.3% and 69.6% (q IV – 92,1% and 71,3% respectively). High expectations for growth of prices for purchased products, and the products of their own
production in construction enterprises (balances of responses of 96.6% and 82,8%) and processing industry (96.5% and 81,9%).
More than the rise in price of products of own production will affect the price of energy and raw materials. Increased assessment of the impact of the cost of the workforce (an increase of 3.9 p. p.). The least impact on selling prices, as in the previous quarter, will carry out the level of interest rates on loans, and demand for products.
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
The hryvnia
68,3
55,5
59,7
62,0
60,8
Prices for raw materials
58,7
59,3
58,5
61,3
61,4
The labor cost
25,9
31,3
34,8
47,1
51,0
The tax burden
23,4
24,6
18,5
22,9
21,7
The demand for the products
14,5
13,8
15,5
13,6
10,4
Competition
13,6
14,6
13,4
15,1
10,7
Prices on world markets
11,0
11.1 V
12,3
13,0
12,2
The level of interest rates on loans
11,5
12,0
10,8
11,9
8,0
Pay. Expectations for increased spending on wages of one employee became weaker. The balance of responses compared to 68.1% (IV quarter of 71.7%). High expectations of all economic activities – agricultural enterprises (balance of responses – 82,4%); by regions – enterprises in Chernivtsi and Khmelnytsky regions (100,0% and 94.7%, respectively). Low expectations: on types of economic activities – from extractive industry (balance of responses – 57,8%); by regions – enterprises in Sumy region (38.9 percent).
Finance. Enterprises have improved their expectations regarding the growth of demand for borrowing in the near future: the balance of responses 36.7 per cent (in IV quarter – 33,5%). The greatest need for borrowing:
- by kinds of economic activities – enterprises in construction (balance of responses 55,6%);
- size – small (40%);
- activity – the enterprises performing only import transactions (47,2%);
- by regions – enterprises in Khmelnytskyi region (80%).
The share of respondents that plan to take loans remained almost at the previous quarter level – 34,0% against 34.6 per cent. Most plan to borrow:
- by types of economic activity enterprises of processing industry (51.7% of answers);
- size – large (44,2%);
- by regions – enterprises of Ivano-Frankivsk (52,2%).
The percentage of respondents who plan to raise funds abroad decreased to 8.1% compared with 8.9%.
A major obstacle to attracting new loans is still too high rate (67.2 per cent of respondents). Significant factors: the presence of other sources of funding and uncertainty about the ability to timely fulfill its debt obligations.
Continued reductions in estimates of the stiffness of the conditions of access to Bank loans. The balance decreased to 27.7% from 30.3%.
Retained the growth of the share of enterprises claiming that they have no problems with banking operations – now 94,6% against 94%. It seems that the quality of the banks really improved.
