For the first time since the start of the full-scale war, businesses expects an increase in business activity in the next 12 months: the business activity expectations index in the second quarter rose to 104.5% from 91.2% in the first quarter, the National Bank of Ukraine (NBU) said.

"Against the backdrop of the restoration of the energy system, the gradual revival of domestic demand and the strengthening of the hryvnia, respondents expect an increase in the volume of production of goods and services, and are also positive about the development of their own enterprises. At the same time, inflation and exchange rate expectations have improved," the NBU said in a press release.

It clarified that the improvement in estimates occurred in enterprises of all types of economic activity, as well as for all components of the index.

In particular, business predicts a rapid growth in the production of goods and services in Ukraine in the coming year: the balance of responses amounted to 17.3% against "minus" 16.7% in the first quarter. Growth is expected by enterprises of all directions and types of economic activity, sizes in terms of the number of employees and most areas.

Inflation expectations continued to improve: in the second quarter of 2023, expected annual inflation was 15.7% compared to 20.7% in the previous quarter. According to the survey, 46.6% of surveyed enterprises believe that inflation, which fell to 12.8% in June, will not exceed 15.3% in the next 12 months. According to 88.4% of respondents, military operations remain the most significant pro-inflationary factor.

In addition, the National Bank pointed out, the influence of the "exchange factor" and "production costs" has somewhat weakened. The new average exchange rate that respondents expect in 12 months is UAH 40.43/$1 against UAH 42.18/$1 a quarter earlier. Moreover, the share of respondents who expect the hryvnia exchange rate to remain unchanged to UAH 40.00/$1 in the next year increased from 19.7% to 44.3%.

At the same time, although the respondents' assessment of their own current financial and economic condition has improved, it still remains negative: the balance of answers amounted to "minus" 11.1% compared to "minus" 16.9% in the first quarter. Construction companies reported a deterioration in the situation, energy and water supply companies reported no improvement, and extractive industries reported a slight improvement.

However, for the first time in five quarters, the expectations of enterprises regarding the dynamics of their financial and economic condition became positive: the balance of answers became positive - 9.6% against "minus" 2.5% in the first quarter. Improvements are expected by enterprises of all areas of activity and size in terms of the number of employees, most areas and types of activity, the NBU specified.