Ukrainian business improved its performance assessment for the first time in a year and a half

In April 2023, the Business Activity Expectations Index (BAEI) which is calculated by the National Bank on a monthly basis, rose to 51.5 from 49.5 in March, crossing the neutral level, indicating expectations for production growth.

This was reported by the press service of the National Bank based on the results of a monthly survey of enterprises.

It is noted that the expectations of enterprises in most sectors were positively affected by an improvement in the situation in the energy sector, an increase in supply of food and fuel, better inflation and exchange rate expectations, and stronger consumer confidence of households.

For the second time in a row, trade firms provided the most optimistic assessments of their performance and prospects, given the slowdown in inflationary pressures, revival in consumer demand, and increased supply of goods: the sectoral index rose to 57.6 in April from 53.6 in March. Respondents improved their expectations for trade turnover and the volume of purchases of goods for sale. Despite higher estimates of growth in purchase prices, they expected an increase in trade margins for the first time since July 2019.

Industrial enterprises have been expecting an improvement in their economic performance for the second month in a row on the back of better logistics, lower production costs on restoring the electricity supply, and stabilization of fuel prices: the sector’s index was 50.5 in April, compared to 51.2 in March. 

Services companies continued to moderate the negative assessments of their economic prospects thanks to the gradual recovery in demand, and improvement in electricity supply, and the seasonal factor: the sector’s index was 48.8, up from 45.7 in March. 

Construction companies provided the most reserved assessments of their economic performance among all other sectors in view of weak financial capability of consumers, the lack of investment, and unfavorable weather conditions. In contrast to the previous month, the respondents expected a decline in construction volumes and increased their negative assessments of volumes of new orders. 

"Despite a certain moderation of their forecasts, most polled companies said they continued to have high expectations of growth in purchasing prices and their selling prices," the NBU said.

Background. The monthly survey of enterprises was conducted from 4 to 21 April 2023. The survey involved 481 enterprises.

Out of the surveyed companies, 33.5% were both exporters and importers, 8.9% were exporters only, 16.4% were importers only, and 41.2% did not carry out foreign economic operations.