Business strengthens devaluation expectations: average exchange rate expected at 44.4 UAH/USD

Business has strengthened devaluation expectations: the average exchange rate is expected to be at the level of 44.4 UAH/USD.

This is stated in the NBU material, the Ukrainian News agency reports.

The Business Expectations Index (BEI) was 101.8% compared to 100.6% in the third quarter of 2024 (hereinafter referred to as the third quarter).

Survey participants maintained positive assessments of total product sales, strengthened their expectations of investment expenditures for machinery, equipment and inventory, and also somewhat softened their negative assessments of investment expenditures for construction work and the number of employees.

At the same time, respondents worsened their assessments of the future financial and economic condition of enterprises.

Military actions and their consequences remain the most significant factor affecting the ability of enterprises to increase production volumes.

Business cautiously assessed the volume of production of goods and services in the next 12 months: the balance of responses was "minus" 1.4% (in the third quarter - 3.7%).

A decrease was predicted by enterprises in the extractive industry, construction, trade, transport and communications, as well as other types of activity; respondents from ten regions; small enterprises; enterprises that carry out only import operations, and those that work exclusively on the domestic market.

At the same time, enterprises in the processing industry, agriculture, energy and water supply continued to expect an increase in production volumes; large and medium-sized enterprises, enterprises that carry out foreign operations.

Inflation expectations continued to increase: in the fourth quarter, the annual inflation expected in the next 12 months was 10.3% compared to 9.7% in the previous quarter.

The share of respondents who expected inflation not higher than 10.0% decreased over the quarter from 54.4% to 46.3%.

Military actions remain the most significant pro-inflationary factor for 82.9% of respondents.

The impact of the tax factor has increased the most – by 4.4 pp to 42.3%. In contrast, the impact of the exchange rate factor has weakened – by 5.1 pp to 70.3%.

Devaluation expectations have increased: the average exchange rate that respondents expected in 12 months was 44.42 UAH/USD (in the previous quarter – 43.72 UAH/USD).

68.8% of respondents expected the hryvnia exchange rate to fluctuate in the range of 42.1 – 46.0 UAH/USD in the next 12 months.

Assessments of the current financial and economic condition of enterprises remained negative: the balance of responses was "minus" 6.1% compared to "minus" 6.0% in the third quarter.

Respondents were cautious in assessing changes in the financial and economic development of their own enterprises in the next 12 months: the balance of responses was "minus" 1.2% (in the third quarter - "minus" 0.9%).

The deterioration of assessments occurred in enterprises in construction, trade, transport and communications, other types of activities, as well as the extractive industry. At the same time, respondents in the processing industry, agriculture, as well as energy and water supply had optimistic expectations.

For the second quarter in a row, respondents noted the strengthening of conditions for access to bank loans: the balance of responses was 16.3% (in the previous quarter - 15.4%).

The share of companies planning to raise funds abroad increased to 8.5% from 8.2% in the third quarter.

The quarterly survey was conducted from October 31 to November 29, 2024. The survey was conducted among 660 enterprises from 21 regions of the country (excluding the temporarily occupied territory of the Autonomous Republic of Crimea, as well as the Donetsk, Luhansk and Kherson Regions). Among the surveyed enterprises, 21.4% were trade companies, 18.5% were processing industry companies, 14.8% were agriculture companies, 13.5% were transport and communications companies, 6.8% were mining companies, 4.7% were energy and water supply companies, 2.9% were construction companies, and 17.4% were others; 29.4% of respondents were large enterprises, 36.8% were medium-sized enterprises, and 33.8% were small.

As the Ukrainian News agency earlier reported, the survey results reflect only the opinions of the respondents – heads of enterprises, and not the assessments of the National Bank of Ukraine.

The Business Expectations Index is an aggregated indicator of the expected development of enterprises in the next 12 months.

It is calculated based on the results of surveys of enterprises as the arithmetic mean of the balances of responses regarding the financial and economic condition of enterprises, total sales of products of their own production, investment expenditures for construction work, investment expenditures for machinery, equipment and inventory, and the number of employees.

An index value of more than 100 means a predominance of positive economic sentiments in society, while a value below 100 means a predominance of negative economic sentiments.