Business expects further economic growth, decline in inflation rate – NBU survey

This is evidenced by the results of a survey conducted by the National Bank of Ukraine (NBU) among managers of Ukrainian companies in Q3, 2019, the central bank’s press service reported.

"Ukrainian companies have improved their expectations for economic growth in Ukraine and forecast significantly lower inflation than they expected in Q2, 2019," reads the report.

The level of business activity of enterprises remains high: the Business Expectations Index (BEI) for the next 12 months totals 115.3% (117.8% in the previous quarter). Respondents of all types of economic activity predict a revival in business affairs, the central bank stressed.

In particular, optimistic inflation expectations among business representatives have been observed for the third quarter in a row, the NBU noted.

"In general, business expects inflation to reach 6.9% in the next 12 months (7.7% in Q2, 9% in Q1),” reads the report. As before, entrepreneurs named the increase in production costs the most important factor influencing inflation.

As to devaluation expectations, business representatives said they expected the hryvnia exchange rate in the next 12 months would be at the level of UAH 27.96 per the U.S. dollar. In the previous quarter, the exchange rate of hryvnia was UAH 28.82 per the U.S. dollar. At the same time, almost a third of companies, which is 32.3%, said the rate would not exceed UAH 27.00 per the U.S. dollar.

Business representatives also have positive expectations for the growth of Ukrainian production in the next 12 months. A total of 39.5% of those polled said they predict higher growth rates (38.2% in the previous quarter), while only 9.1% of entrepreneurs expect a decrease in production volumes.

Also, 38.6% of companies stated they expected their financial and economic status would improve in the next 12 months, only 11.5% said they expected worsening. Optimistic expectations have enterprises of almost all types of economic activity, except for the energy and water supply sectors, the central bank said.

The survey was conducted between August 5 and September 3, 2019. A total of 690 companies from 22 regions of Ukraine took part in the poll (excluding the temporary occupied territories of the Autonomous Republic of Crimea, Luhansk and Donetsk regions).

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