OREANDA-NEWS. May 28, 2012. The latest regular quarterly survey of company managers regarding their assessment of current and future business activity, inflation and exchange rate expectations, and changes in the business climate in the country was conducted in February 2012.

Disclaimer: The results of the survey reflect the opinions of respondents – Ukrainian business managers – as of February 2012, and do not represent the views and policies of the NBU.

Conclusions

According to the survey results, the volume of production of goods and services in Ukraine in the next 12 months will not change.

Inflation expectations declined essentially and approached the all-time minimum. An increase in production costs and energy costs were named as the key factors for the expected high inflation.

Respondents essentially improved their exchange rate expectations. The share of respondents who expect hryvnia exchange rate to US dollar will be stable increased

essentially.

Most of respondents estimated their own current financial and economic conditions positively. Share of respondents who estimated their own current financial and economic conditions as “good” increased. The respondents reported decrease in inventories. Capacity utilization has not changed.

Business expectations index remained on the level of previous quarter (119.3%). Expectations improved about financial and economic conditions and future sales over the next 12 months. Most of respondents have essentially improved business activity expectations over the next 3 months due to seasonal factor.

Most of respondents expect input and output prices growth. But share of respondents who does not expect change in prices increased in comparison with the previous quarter. It means that the price pressure in the economy will be lower over the next 12 months, and that the inflation expectations declined. Production costs and labor costs will also grow slowly. The costs of raw materials and energy are expected to remain the key factor to the changes in output price levels. Influence of the exchange rate volatility and credit interest rates on prices is still on a low level.

The respondents expect growth in borrowing needs over the next quarter. Share of respondents who plan to borrow from banks slightly declined. Most of respondents plan to borrow in hryvnia.

Director of General economic department Mr. Ihor Shumylo commented: “Lower inflation rate, stable foreign exchange market and higher predictability of financial markets are the key factors for improvement in expectations. Unstable external situation due to debt problems of Euro zone countries, which have been the main trade partners for us, and the high gas prices are the main risks for future economic development of exportoriented companies”.

In total, 1,249 enterprises from all regions were interviewed. They were selected to reflect the economy structure with regards to principal types of activity, forms of ownership and size of enterprises as measured by the number of employees.

"Business Outlook Survey in Q1 2012" report is published on the NBU web site.