Business Outlook Survey ResultsРезультати of surveys опитувань of Vinnitsa керівників region * enterprisesпідприєм managersств м. ofКиєва Ternopil regarding і Київської O blasttheir області щодоbusiness їх ділових expectations очікувань* * Q4 2020 Q2 2018 I квартал 2018 року
*This survey only reflects the opinions of respondents in Ternopil oblast (top managers of *Надані результати є відображенням лише думки респондентів – керівників підприємств Вінницької companies) who were polled in Q4 2020, and does not represent NBU forecasts or estimates області в IІ кварталі 2018 року і не є прогнозами та оцінками Національного банку України.
Business Outlook Survey of Ternopil Oblast Q4 2020
A survey carried out in Ternopil oblast in Q4 2020 showed that respondents expected a drop in the output of Ukrainian goods and services over the next 12 months on the back of a tighter quarantine. At the same time, they had positive expectations for the performance of their companies. Respondents expected inflation to increase and the domestic currency to depreciate more noticeably.
The top managers of companies said they expected that over the next 12 months:
. the output of Ukrainian goods and services would drop significantly: the balance of expectations was (-30.0%) compared with 0.0% in Q3 2020 (Figure 1) and (-24.4%) across Ukraine
. prices for consumer goods and services would grow at a faster pace: half of respondents expected the inflation rate to be lower than 7.5% compared with 90.0% in the previous quarter and 49.2% across Ukraine. Respondents referred to the exchange rate and production costs as the main inflation drivers (Figure 2). The impact of household income was reported to have increased noticeably compared to the previous quarter
. the domestic currency would depreciate further: 80.0% of respondents (compared with 72.7% in the previous quarter) expected the hryvnia to weaken against the US dollar, the figure across Ukraine being 87.1%
. the financial and economic standings of their companies would improve at a slower pace: the balance of expectations was 11.1% compared to 36.4% in the previous quarter. The financial and economic standings of companies across Ukraine were expected to improve slightly (1.3%) (see Table)
. total sales would increase at a slower pace: the balance of responses was 20.0% compared with 30.0% in Q3 2020 (see Table). External sales were expected to remain unchanged (the balance of responses was 0.0% compared with 33.3% in Q3 2020). Overall, companies across Ukraine expected sales to increase moderately, the balances of responses being 7.1% and 3.8% respectively
. investment both in construction and in machinery, equipment, and tools would increase: the balances of responses were 22.2% and 10.0% respectively (compared to 10.0% and 20.0% in Q3 2020). Across Ukraine, the balances of responses were (-4.5%) and 3.8% respectively . staff numbers at their companies would increase: the balance of responses was 10.0% compared with 0.0% in Q3 2020. Across Ukraine, staff numbers were expected to decrease (-9.9%) (Figure 4)
. the growth in both purchase and selling prices would accelerate: the balances of responses were 90.0% and 40.0% respectively (compared with 81.8% and 30.0% respectively in Q3 2020) (Figure 6). Wage costs and the exchange rate were referred to as the main selling price driver (Figure 7)
. per-unit production costs and wage costs per staff member would grow at a fast pace: the balances of responses were 88.9% and 60.0% compared with 33.3% and 63.6% respectively in Q3 2020 (Figures 4 and 6). Companies cited a lack of working assets and high raw material, supplies and energy prices as the main drags on their ability to boost production (Figure 5). Respondents continued to expect an increase in their borrowing needs in the near future (Figure 8). Some 40.0% of respondents planned to take out corporate loans and opted for domestic currency ones. Respondents said that lending standards had remained unchanged for four quarter in a row (Figure 9). Respondents referred to high loan rates as the main factor that deterred them from taking out loans. Respondents reported a noticeable increase in the impact of the uncertainty about their ability to meet debt obligations (Figure 10). All of the respondents said that they had encountered no difficulties in effecting transactions with funds deposited in bank accounts (96.9% across Ukraine).
Assessments of financial and economic standings as of the time of the survey (Figure 3) . Companies assessed their current financial and economic standings as good: the balance of responses was 10.0% compared with 9.1% in Q3 2020. Across Ukraine, respondents assessed the current financial and economic standings of their companies as bad: the balance of responses was (-3.2%).
. Respondents continued to assess their finished goods stocks at a level lower than the normal one: the balance of responses was (-28.6%) compared with (-40.0%) in Q3 2020.
. Unutilized production capacity had increased. Companies had a sufficient amount of unutilized production capacity to meet any unexpected rise in demand: the balance of responses was 12.5% compared with 0.0% in Q3 2020.
2 Business Outlook Survey of Ternopil Oblast Q4 2020
Survey Details1,2
Respondents in terms of business Respondents in terms of main economic Respondents in terms of company size based on activities,% activities, % staff number, %
Large (more Other Neither exporters than 250 20.0 nor importers persons) 55.6 20.0 Exporters only 33.3
Agriculture 40.0 Transport and communications Medium (from 51 10.0 and up to 250 persons) Small (up to 50 Both exporters 20.0 persons) and importers Wholesale and 11.1 retail trade 60.0 10.0 Manufacturing 20.0 . Period: 5 November through 24 November 2020. . A total of 10 companies were polled. . A representative sample was generated on the basis of the agricultural sector.
Business Business Outlook outlook Index index for forNext next 12 12 Months months in in Terms terms of of regions,% Regions3, %
Riv ne Oblast Voly n Oblast Chernihiv Oblast 106.9 103.7 Zhy tomyr 92.2 Sumy Oblast Oblast 98.8 106.2 Ky iv and Lv iv Oblast Ky iv Oblast 100.6 Poltav a Oblast Kharkiv Oblast Ternopil Oblast 107.7 95.4 97.2 114.7 Khmelny tskyi Cherkasy Luhansk Oblast Iv ano-Frankivsk Oblast Vinny tsia Oblast Zakarpattia Oblast 89.2 Oblast 98.9 Oblast 105.3 no data 106.5 Donetsk 84 Cherniv tsi Oblast Kirov ohrad Oblast Dnipropetrov sk Oblast Oblast 94.5 79.9 92.5 no data Zaporizhia My kolaiv Oblast Odesa 87.3 Oblast Oblast 102.2 80.8 Kherson Oblast 104.7 minimum 79.9 1 quartile 92.3 1 quarter 2 quartile (median) 98.8 Crimea 2 quarter 3 quartile 105.2 no data 3 quarter maximum 114.7 4 quarter Ukraine 99.6
*a quartile is the v alue of the BOI where an ordered sample is div ided into f our equal-sized subgroups **a median is the v alue of the BOI in the middle of an ordered sampled where the sample is div ided into two equal-sized subgroups
Table. The Business Outlook Index of Companies in Ternopil Oblast and Its Components
Balances of responses, % Expectations over next 12 months for Q4 19 Q1 20 Q2 20 Q3 20 Q4 20
Financial and economic standings 30.0 45.5 0.0 36.4 11.1
Total sales 33.3 54.5 10.0 30.0 20.0
Investment in construction 20.0 40.0 -11.1 10.0 22.2
Investment in machinery, equipment, and tools 10.0 45.5 0.0 20.0 10.0
Staff numbers 0.0 9.1 -10.0 0.0 10.0
1 This sample was generated in proportion to the contribution of each region and each economic activity to Ukraine’s gross value added. 2 Data for totals and components may be subject to rounding effects. 3 The business outlook index (BOI) is an aggregate indicator for expected business performance over the next 12 months. It is calculated using the balances of respondents' responses regarding changes in the financial and economic standings of their companies and future economic activity.
3 Business Outlook Survey of Ternopil Oblast Q4 2020
Figure 1 Figure 2
Output expectations for next 12 months, Assessment of consumer price drivers, percentage of responses percentage of responses
100 100 0 20 40 60 80 100
80 80 Exchange rate
60 60 Production costs 40 40
20 20 Household income 0 0
-20 -20 Tax changes
-40 -40 Budgetary social Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 spending Output will decrease Output will be unchanged Output will increase Supply (availability) of Balance of expectations (right-hand scale) money Q4 20 Q3 20
Global prices
Figure 3 Figure 4
Companies' economic activity as of the time of the Staff level and wage cost expectations for next 12 survey, balance of responses months, balance of responses 80 100 60 80 40
20 60
0 40
-20 20 -40 0 -60 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 -20 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Financial and economic standings Staff level expectations Wage costs per staff member Finished goods stocks Unutilized production capacity Figure 5 Figure 6
Assessment of factors that impede output Expectations of producer prices for next 12 growth, percentage of responses months, balance of responses 0 20 40 60 100 Lack of working assets
High raw material and 80 supplies prices High energy prices 60 Exchange rate fluctuations
Weak demand 40
Political situation 20 Tax burden 0 Qualified staff shortages Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Insufficient production capacity Purchase prices Selling prices Corruption Per-unit production costs
Regulatory burden Q4 20 Q3 20 Limited availability of loan
4 Business Outlook Survey of Ternopil Oblast Q4 2020
Figure 7 Figure 8
Expectations of borrowing needs and intentions to Assessment of selling price drivers, take out corporate loans in the near future, percentage of responses percentage of responses 0 20 40 60 80 60 60 Exchange rate
Wage costs 45 45
Raw material and supplies prices 30 30 Energy prices
Demand 15 15
Global prices 0 0 Domestic competition Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Percentage of respondents who intend to take out loans, % Tax burden Q4 20 Q3 20 Borrowing needs (balance of responses, right-hand scale) Loan rates
Figure 9 Figure 10
Expectations of lending conditions for next 12 Assessment of factors that could deter months, balance of responses* companies from taking out loans, percentage of responses 30 0 20 40 60 80
High loan rates 20
Uncertainty about ability to meet debt obligations as they fall due 10 Collateral requirements
0 Complicated paperwork Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 *The difference between the percentages of responses “tightened” and “eased” Other funding sources
Q4 20 Exchange rate fluctuations Q3 20
5