OREANDA-NEWS. The National Bank of Ukraine has conducted a regular quarterly survey of enterprise presidents/managers on their assessment of the current and future business activity, inflation and exchange rate expectations and economic outlook for the country.

976 enterprises from 22 regions (excluding the temporarily occupied Autonomous Republic of Crimea and the City of Sevastopol as well as Donetsk and Luhansk Oblasts) representing the economy in terms of main activities, patterns of ownership, size and staff number were polled from November 14 till December 5, 2014.

The survey only reflects the opinions of respondents (heads/managers of Ukrainian enterprises) who were polled in the fourth quarter of 2014, and does not represent NBU forecasts or estimates.

Business Outlook Survey results reflect the complicated economic situation in Ukraine. The respondents expect the consumer prices and production costs to increase over the next 12 months, driven by hryvnia depreciation against US dollar. At the same time, price trends in world markets and money supply changes are considered the least significant (mentioned by 15.1% and 15.6 % of respondents respectively).

At the same time, there are signs of a gradual improvement in the economic situation in the mid-term perspective. The respondents have been deteriorating the assessments of the current financial and economic standing of their enterprises for the fifth running quarter. However, the balance of assessments has improved, being (-5.6%) versus (-8.2%) in the third quarter of 2014, with the respondents from agricultural and mining enterprises playing a key role in this development. The respondents from large enterprises gave a positive assessment to the financial and economic standing of their enterprises for the first time in the past four quarters. The respondents also resumed positive expectations about an increase in investment expenditures for machinery, equipment and instruments over the next 12 months. As a result, the Business Outlook Index (BOI)[1] climbed by 2.9 p.p. compared with the previous quarter and made 96.1%.

The respondents expect a significant increase in borrowing needs over the next three months. The percentage of respondents who intend to take out hryvnia loans remains the largest (86.5% of respondents). However, there was an increase in the percentage of respondents who intend to take out loans in US dollars. The percentage of respondents (mostly large enterprises) that plan on obtaining loans from abroad has somewhat increased.

In addition, most respondents indicated that they had no difficulty in carrying out transactions using funds placed in the bank accounts.

The respondents believe political instability (reported by 53.7% of respondents), significant fluctuations of the hryvnia exchange rate against other currencies (reported by 52.0% of respondents, the figure being a new high in the history of the survey) and high energy prices (50.1% of respondents) to be the main drags on output growth.

Most respondents (90.1%) follow NBU activities on a continuous basis.