Economy 2024-06-15T05:27:26+03:00
Ukrainian news
Business Worsens Estimates Of Business Activity Due To Losses From Full-Scale War

Business Worsens Estimates Of Business Activity Due To Losses From Full-Scale War

Russia, war, Ukraine, NBU, war with Russia, Russia's war against Ukraine, full scale Russian invasion, business activity expectations index, BAEI

In November, businesses continued to suffer losses from full-scale war and terrorist attacks and, accordingly, downgraded their economic performance.

This is stated in the message of the NBU, Ukrainian News Agency reports.

Continuation of hostilities, further destruction of critical infrastructure, logistics, increase in production costs, as well as a decrease in incomes of the population affected the deterioration of estimates regarding the economic results in the near future of enterprises of all sectors participating in the monthly surveys of the National Bank.

This is evidenced by the business activity expectations index (BAEI), which the National Bank calculates every month, with the exception of the forced break in March - May of this year.

In November 2022, the BAEI decreased to 42.7 from 44.9 in October.

Industrial enterprises reinforced negative assessments of their economic outlook due to the destruction of production capacity and infrastructure: the sector index stood at 44.1 in November compared to 45.8 in October.

The respondents worsened their expectations regarding the volume of manufactured products, the volume of new orders for products, including export orders.

At the same time, estimates regarding the volumes of unfinished production were less pessimistic than in the previous month.

Enterprises of the construction sector slightly weakened the pessimistic estimates regarding their activity: the sectoral index was 41.0 (in October - 38.2).

Respondents moderated expectations regarding the volume of completed construction works and the volume of new orders and are set on increasing the volume of procurement of their services against the backdrop of improved availability of contractors.

Although they remain below the neutral level, estimates regarding the volumes of raw materials and materials purchases have increased significantly.

Trade enterprises in November worsened estimates of the prospects of their economic activity under the influence of increased intensity of hostilities and lower incomes of the population: the sectoral index decreased to 45.2 compared to 48.9 in October.

Respondents worsened their estimates regarding the volume of merchandise turnover and the volume of purchases of goods for sale.

At the same time, in contrast to the previous month, they expect an increase in stocks/remains of goods for sale.

Trading companies forecast a lower rate of growth in the value of goods purchased for sale, while maintaining expectations for a decrease in trade margins.

Businesses in the services sector also lowered their own expectations, given the disruption of supply chains and rising production costs, with the sector index falling to 40.0 from 42.2 in October.

Respondents increased their negative expectations regarding the volume of services provided, new orders and services in progress.

Most of the enterprises participating in the surveys increased their expectations regarding the increase in the price of their own products/services against the background of high expectations regarding the prices of raw materials and goods of suppliers.

Enterprises in all sectors included in the survey continue to expect a reduction in the total number of employees, the largest in the construction sector.

The monthly survey of enterprises was conducted from November 3 to 23, 2022.

432 enterprises took part in the survey.

Among the respondents, 45.4% were industrial enterprises, 27.5% were in the service sector, 22.9% were in trade, and 4.2% were in construction; 30.1% of respondents are large enterprises, 31.7% are medium-sized enterprises, and 38.2% are small enterprises.

32.2% of surveyed enterprises carry out export and import operations, 10.4% - only export operations, 16.2% - only import operations, 41.2% - do not carry out external economic operations.

As Ukrainian News Agency earlier reported, the results of the polls reflect only the opinion of the respondents - company managers, and not the assessments of the National Bank of Ukraine.

The monthly index of expectations of business activity (BAEI) is a tool for operational assessment and tracking of economic development trends. The index is calculated on the basis of surveys of Ukrainian enterprises in the real sector of the economy.

On the basis of respondents' answers, monthly indexes of expectations of business activity are calculated - sectoral (for each sector of the economy) and composite, which characterizes the economic development of the country for the month. The index value at 50 is neutral.

Expectations are positive if the index value exceeds the neutral level.