12:44 12.10.2016

Inflation, business expectations in Ukraine again improve in Q3 2016

2 min read
Inflation, business expectations in Ukraine again improve in Q3 2016

Inflation, hryvnia devaluation and business expectations of Ukrainian business circles continued improving in the third quarter of 2016.

Such estimates are recorded in a survey conducted by the National Bank of Ukraine (NBU) among the country's business leaders in the second quarter of 2016.

According to the poll, Ukrainian business continues improving inflation expectations for the sixth quarter in a row. Top managers of companies expect that consumer prices would grow by 13.9% on average in the next 12 months (18.9% in Q2 2016) along with weakening hryvnia devaluation expectations.

Most of respondents (61.1%) are convinced that growth of consumer prices would not exceed 15%.

The top managers of companies said that the key factors of inflation remain the hryvnia exchange rate (81.8%) and expenses on production (61.3%). The influence of the exchange rate factor has increased, compared to the previous study.

Some 68.4% of respondents predict that the hryvnia exchange rate to the U.S. dollar in the next 12 months would be in the UAH 26-30/$1 range (59.7% respondents in Q2 2016).

Average projected exchange rate is UAH 28.03/$1, which is slightly less than in the previous quarter (UAH 28.66/$1).

Respondents also positively assessed the current financial and economic state of their enterprises for the first time in the past three years. The balance of answers grew to 1.2% from minus 2.8% in Q2 2016.

Respondents improved business expectations for the second quarter in a row.

Business expectations index increased to 109.2% (108.5% in the previous quarter), which is the highest since Q1 2014.

According to the poll, top managers of companies expect the acceleration of foreign direct investment (FDI) growth.

The share of respondents who plan to raise FDI in the next 12 months is 22.6% (23.6% in Q2 2016).

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