Businesses ease negative expectations for future operations

Businesses ease negative expectations for future operations

Businesses are reported to have moderated their negative expectations regarding the dynamics of production volumes for the next 12 months.

That’s according to a survey run among top managers by the National Bank in 4Q 2022, Ukrinform reports.

"Businesses have slightly softened their negative expectations regarding the dynamics of the volume of production of goods and services in Ukraine for the next 12 months against the background of active hostilities and terrorist attacks," the report says.

According to the survey, for the second quarter in a row there has been a softening of negative expectations regarding the future business activity of enterprises. A slight weakening of negative expectations occurred mainly due to less pessimistic estimates regarding investment costs and the number of employees.

It is noted that inflation expectations have improved: in 4Q 2022, the expected annual inflation stood at 23.3% compared to 25.2% in the previous quarter. Some 71.8% of surveyed enterprises believe that inflation in the next 12 months will not exceed 30.0%. According to 89.2% of respondents, the most significant pro-inflationary factor is combat operations. The influence of the "production costs" factor has increased significantly.

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The share of those who expect the exchange rate of the national currency to be in the range of UAH 38.00–40.00 to the dollar has almost halved. The average value of the exchange rate, which respondents expect in 12 months, is UAH 42.59 to the U.S. dollar (in the previous quarter it was UAH41.93/USD).

Despite the softening of respondents' assessments of the current financial and economic condition of their own enterprises for the second quarter in a row, the overall assessment remains negative. At the same time, respondents' expectations regarding changes in the financial and economic condition of enterprises in the next 12 months have improved, while remaining generally negative.

Businesses continue to expect a decrease in sales volumes, including on the foreign market. Only trade enterprises expect an increase in the total volume of sales.

For the second quarter in a row, businesses continue to forecast a reduction in the number of employees at enterprises at a lower rate. The most pessimistic assessments prevail in the mining industry (-40.0%), transport and communications (-28.9%), as well as agriculture (-26.1%).

As reported, the quarterly survey was run from October 31 to November 30, 2022. Some 637 enterprises from 21 regions of the country participated in the poll (excluding the temporarily occupied territory of the Autonomous Republic of Crimea, as well as Donetsk, Luhansk and Kherson regions). Among the surveyed enterprises, 21.2% are wholesale and retail trade companies, 19.3% represent the processing industry, 14.1% work in agriculture, 13.0% operate in transport and communications, 6.6% are part of the mining industry, 4 .9% – energy and water supply, 3.0% – construction, 17.9% – others.

Read also: Economy Ministry: Ukraine's economy shrinks by 30.4%

The results of the surveys reflect the opinion of the respondents - managers of enterprises, not the assessments of the National Bank of Ukraine.

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