14:33 16.01.2016

Ukrainian business circle's inflation expectations improve in Q4 2015, devaluation expectations worsen - NBU

2 min read
Ukrainian business circle's inflation expectations improve in Q4 2015, devaluation expectations worsen - NBU

Inflation expectations of business circles in Ukraine in the fourth quarter of 2015 improved and devaluation expectations grew, while the business expectations index exceeded 100%.

The assessments were recorded during a poll conducted by the National Bank of Ukraine (NBU) in November-December 2015, a total of 859 enterprises in 22 regions of Ukraine (not taking into account annexed Crimea and Donetsk and Luhansk regions) were surveyed.

"The companies improved its inflation expectations for the third quarter in a row. In the next 12 months the companies expect that consumer prices could grow by 22.5% on average. In the third quarter they forecasted that inflation would be 25.5%," the NBU said on its website.

The regulator said that the expected growth of prices is linked to the hryvnia exchange rate and the increase of expenses on production. The pace of money supply in the economy, the pace of global prices and social expenses of the national budget have the smallest impact on growth of prices.

However, due to fluctuations of the hryvnia exchange rate in the past months devaluation expectations of companies' heads worsened in response: 86.6% of respondents predict that the hryvnia exchange rate could fall in 12 months.

The companies also anticipate that business activity will grow in 2016.

"Business expectations index exceeds 100% for the second consecutive quarter, which had not been recorded since the second quarter of 2014. In late 2015, the indicator reached 104% - a record in 18 months. The indicator grew by 3.8 percentage points compared to the previous quarter," the central bank said.

The NBU said that agricultural, energy and water supply and retail companies are the most optimistic ones. Mining and transport companies have the worst expectations.

According to the poll, taking into account the gradual resumption of production, companies predict that their needs in borrowed funds will grow in the near term. 35% of respondents plan to take bank credits to finance their operations, including 86.2% of them prefer credits in the national currency.

The share of companies which have no problems with carrying out transactions with funds placed on banking accounts grew for the third successive quarter: 91.3% of respondents.

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