The level of business activity of enterprises in Ukraine set an opposing record

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It also became known what the business expected in the next 12 months.

The level of business activity of enterprises in Ukraine has set an opposing record. Photo: led watch-adboot.com

For the entire observation period after the first quarter of 2015, the level of business activity of enterprises decreased to 90.8% (first quarter of 2020 – 110.5%). This is evidenced by a survey of company managers conducted by National Bank in the second quarter of 2020.

The business eroded expectations about economic growth, inflation, as well as its own financial and production results over the next 12 months.

According to the NBU Press Service, estimates of the companies’ current financial and economic condition have worsened under the influence of a coronacre and quarantine. Despite the elimination of a significant number of restrictions and the introduction of adaptive quarantine after overcoming the first wave of virus spread, the business does not expect a rapid improvement in its performance.

Spoiled as well Enterprise inflation expectations. The business predicts that consumer prices will grow at a 7% year on year basis within 12 months (5.1% in the first quarter). More than half of the enterprises surveyed believe inflation will be below 7.5%. Every fifth defendant has expected inflation in the range of 7.6–10.0%. An important factor influencing inflation is the increase in entrepreneurial production costs.

Trade expects a significant weakening of the national currency. The average exchange rate expected by the respondents over the 12 months is 28.28 per dollar of $ 1 ($ 1 per UAH 26.01 in the previous quarter).

Most enterprises believe that the exchange rate will range from $ 27.00 for $ 1 to $ 29.00 for 1 dollar.

For the first time since the first quarter of 2016, enterprises are expected to decrease the amount of production of goods and services in Ukraine. About half of enterprises expect the worst mobility and only every seventh company – production growth. An important factor that will not allow production to increase is the surveyed companies called inadequate demand.

Enterprises expectations about their own business

Most companies do not expect a change in their financial and economic condition in the next 12 months, with 22.0% of companies expecting a decline. In general, representatives of small and medium-sized businesses have more pessimistic assessments. The business is expected to decrease overall sales of products including the overseas market. In general, only respondents from the processing industry and trade predict an increase in this indicator, and the lowest ratings are from manufacturing and mining enterprises. A decrease in investment activity is expected by enterprises of all types of economic activity.

Only 9.1% of enterprises are planning to hire new workers in the next 12 months. Staff reductions comprise 26.3% of the companies polled. As a result, the negative balance of expectations was “zero” at 17.3% (in the previous quarter – “zero” 3.9%).

Pessimistic respondents of all types of economic activity except construction, who expect a constant number of employees. The number of companies planning to increase salaries for their employees over the next 12 months has also decreased significantly. As such – 36.5% (against 63.4% in the previous quarter).

Most companies avoid raising salaries in the near future, and every tenth company plans to reduce labor costs. The share of companies planning to attract debt in Ukraine decreased to 39.2% (in the previous quarter – 44.4%) over the next 12 months. At the same time, the share of companies that plan to take loans abroad slightly increases – by 9.5%. In general, respondents indicated an increased need for loans, but were less confident in their ability to meet their debt obligations on time, the NBU noted.

The quarterly survey was conducted from May 4, 2019 to June 3, 2020. The survey included 691 enterprises from 22 regions of the country (excluding temporarily occupied areas).

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Earlier we wrote that the Ministry of Digital Transformation of Ukraine planned to abolish one of the criteria of the tax code – the so-called “foreign advertising tax”, which is ordered by Ukrainian companies abroad.

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