Zhytomyr Oblast (Top Managers of Companies) Who Were Polled in Q2 2020, and Does Not Represent NBU Forecasts Or Estimates
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Business Outlook Survey Results of surveys of Vinnitsa region * enterprises managers of Zhytomyr regarding O blasttheir business expectations * Q2 2020 Q2 2018 This survey wasI conducted квартал after 2018 the government року announced it would relax the quarantine *This survey only reflects the opinions of respondents in Zhytomyr oblast (top managers of companies) who were polled in Q2 2020, and does not represent NBU forecasts or estimates Business Outlook Survey of Zhytomyr Oblast Q2 2020 A survey of companies carried out in Zhytomyr oblast in Q2 2020 showed that respondents expected a drop in the output of Ukrainian goods and services over the next 12 months on the back of the quarantine. They were optimistic about the future performance of their companies over that period. Respondents expected high inflation. Depreciation expectations softened.1 The top managers of companies said they expected that over the next 12 months: . the output of Ukrainian goods and services would drop: the balance of expectations was (-23.1%) compared with 28.6% in Q1 2020 and (-34.1%) across Ukraine (Figure 1) . prices for consumer goods and services would rise at a fast pace: 69.2% of the respondents expected that the inflation rate would be higher than 7.5% (compared with 45.1% across Ukraine). Respondents continued to refer to production costs as the main inflation driver (Figure 2) . the domestic currency would depreciate: 61.5% of the respondents (compared with 71.4% in the previous quarter) expected the hryvnia to weaken against the US dollar, with the figure across Ukraine being 68.2% . the financial and economic standings of their companies would improve: the balance of expectations was 25.0% (the best assessments across the regions), compared to 23.1% in the previous quarter (see Table). Companies across Ukraine expected a deterioration in their financial and economic standings (-1.8%) . total sales would increase at a fast pace: the balance of responses was 46.2% compared to 42.9% in Q1 2020. External sales were expected to remain unchanged: the balance of responses was 0.0% compared to 25.0% in Q1 2020. Overall, companies across Ukraine expected sales to decrease only slightly, the balances of responses being (-0.1%) and (-0.7%) respectively . the growth in investment both in construction and in machinery, equipment and tools would decelerate: the balances of responses were 30.0% and 27.3% respectively (compared with 41.7% and 38.5% in Q1 2020). Across Ukraine, respondents expected investment spending to decrease, the balances of responses being (-16.1%) and (-10.5%) respectively . staff numbers would remain unchanged: the balance of responses was 0.0% compared with (-14.3%) in the previous quarter (Figure 4). Across Ukraine, staff numbers were expected to decrease (-17.3%) . both purchase and selling prices would rise rapidly: the balances of responses were 100.0% and 76.9% respectively compared with 92.9% and 78.6% in the previous quarter (Figure 6). Raw material and supplies prices, wage costs and energy prices were cited as the main selling price drivers (Figure 7) . per-unit production costs and wage costs per staff member would increase at a fast pace: the balances of responses were 75.0% and 69.2% respectively compared with 92.9% and 100.0% in Q1 2020 (Figures 4 and 6). A lack of working assets and qualified staff shortages were cited as the main drags on the ability of companies to boost production (Figure 5). All of the respondents expected an increase in their borrowing needs in the near future (Figure 8). They plan to take out only domestic currency loans. Respondents said that bank lending standards had tightened significantly (Figure 9). Respondents referred to other funding sources as the main factor that deterred them from taking out loans (Figure 10). All of the respondents said that they had encountered no difficulties in effecting transactions with funds deposited in bank accounts (compared with 96.5% across Ukraine). Assessments of financial and economic standings as of the time of the survey (Figure 3) . The current financial and economic standings of companies had deteriorated and were assessed as bad: the balance of responses was (-15.4%) compared with (-7.7%) in the previous quarter and (-11.6%) across Ukraine (Figure 3). Finished goods stocks had decreased and were assessed as normal: the balance of responses was 0.0% (compared with 20.0% in Q1 2020). Companies in the region had a sufficient amount of unutilized production capacity to meet any unexpected rise in demand: the balance of responses was 30.8% (compared to 28.6% in the previous quarter). 1 This survey was conducted after the government announced it would relax the quarantine. 2 Business Outlook Survey of Zhytomyr Oblast Q2 2020 Survey Details2,3 Respondents in terms of main economic Respondents in terms of enterprise size based Respondents in terms of business activities, % on staff number, % activities,% Agriculture Other 30.8 Neither exporters Large (more Exporters only 15.4 Small (up to 50 nor importers Transport and than 250 23.1 persons) 53.8 communications persons) 46.2 15.4 23.1 Imports only 15.4 Mining 7.7 Wholesale and Medium (from 51 and up Both exporters retail trade Manufacturing to 250 persons) and importers 15.4 15.4 30.8 7.7 . Period: 7 May through 2 June 2020. A total of 13 companies were polled. A representative sample was generated on the basis of the agricultural sector. Business outlook index for next 12 months in terms of regions,% Business Outlook Index for Next 12 Months in Terms of Oblasts4, % Riv ne Oblast Voly n Oblast Chernihiv Oblast 103.1 90.5 Zhy tomyr 85.5 Sumy Oblast Oblast 87.1 125.7 Ky iv and Lv iv Oblast Ky iv Oblast Poltav a Oblast Kharkiv Oblast 105.0 Ternopil Oblast 92.4 81.4 92.1 97.8 Khmelny tskyi Cherkasy Luhansk Oblast Iv ano-Frankivsk Oblast Vinny tsia Oblast Zakarpattia Oblast 89.8 Oblast 102.0 Oblast 93.2 no data 70.9 Donetsk 99.5 Cherniv tsi Oblast Kirov ohrad Oblast Dnipropetrov sk Oblast Oblast 86.7 70.1 85.7 no data Zaporizhia My kolaiv Oblast Odesa 58.8 Oblast Oblast 95.6 88.9 Kherson Oblast 101.5 minimum 58.8 1 quartile 86.0 1 quarter 2 quartile (median) 91.3 Crimea 2 quarter 3 quartile 99.0 no data 3 quarter maximum 125.7 4 quarter Ukraine 90.8 *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 Zhytomyr Oblast and Its Components Balances of responses, % Expectations over next 12 months for Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Financial and economic standings 45.5 16.7 28.6 23.1 25.0 Total sales 38.5 35.7 28.6 42.9 46.2 Investment in construction 23.1 28.6 15.4 41.7 30.0 Investment in machinery, equipment and tools 35.7 35.7 21.4 38.5 27.3 Staff numbers 0.0 -7.1 -7.1 -14.3 0.0 2 This sample was generated in proportion to the contribution of each oblast and each economic activity to Ukraine’s gross value added. 3 Data for totals and components may be subject to rounding effects. 4 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 Zhytomyr Oblast Q2 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 Production costs 60 60 Household income 40 40 20 20 Exchange rate 0 0 -20 -20 Tax changes -40 -40 Budgetary social Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 spending Output will decrease Output will be unchanged Output will increase Supply (availability) of Balance of expectations (right scale) money Q2 20 Q1 20 Global prices Figure 3 Figure 4 Economic activity as of the time of the survey, Staff level and wage cost expectations for next 12 balance of responses months, balance of responses 40 100 30 80 20 60 10 40 0 20 -10 0 -20 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 -20 Q2 19 Q3 19 Q4 19 Q1 20 Q2 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 months, balance of responses 0 20 40 60 100 Lack of working assets Qualified staff shortage 80 Weak demand 60 High energy prices Tax burden 40 High raw material and supplies prices 20 Political situation 0 Exchange rate fluctuations Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Insufficient production capacity Purchase prices Selling prices Regulatory burden Per-unit production costs Limited availability of loan Q2 20 Q1 20 Corruption 4 Business Outlook Survey of Zhytomyr Oblast Q2 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 80 100 75 100 Raw material and supplies prices 60 80 Energy prices 45 60 Wage costs Exchange rate 30 40 Demand 15 20 Loan rates 0 0 Domestic competition Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Percentage of respondents who intend to take out loans Global prices Q2 20 Q1 20 Borrowing needs (balance of responses, right scale) Tax burden 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 100 0 10 20 30 40 80 Other funding sources 60 Collateral requirements 40 Uncertainty about ability to meet debt obligations as 20 they fall due 0 Exchange rate fluctuations Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 *The difference between the percentages of responses “tightened” and “eased” High loan rates Q2 20 Complicated paperwork Q1 20 5 .