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Businesses Report Optimistic Economic Outlook for Three Quarters Running – Q4 2023 Business Outlook Survey

Businesses Report Optimistic Economic Outlook for Three Quarters Running – Q4 2023 Business Outlook Survey

For three quarters in a row, businesses have been expecting a rebound in business activity, albeit at a slower pace, over the next 12 months. Despite security risks and logistical difficulties with crossing the border, respondents expected a more sizable increase in the output of goods and services, while also reporting a positive outlook for the performance of their companies. Inflation expectations continued to improve, while exchange rate expectations worsened slightly.

The business outlook index (BOI) was 101.6%, down from 104.5% in Q3 2023 (Q3). Companies expected a slight rebound in business activity on the back of persisting positive expectations for total sales, investment in machinery, equipment and tools, and for their future financial and economic standings.

Respondents continued to refer to the war and its repercussions as a crucial factor in dampening the performance of their companies. The impact of qualified staff shortages has also increased noticeably.

Businesses’ macroeconomic expectations for Ukraine

For three quarters running, businesses have expected an increase in the output of Ukrainian goods and services over the next 12 months. In Q4, companies strengthened their positive expectations, the balance of responses being 15.2%, compared to 9.8% in Q3. Growth was expected across all companies, regardless of their type of economic activity and size in terms of staff numbers, and across most oblasts and business lines, apart from exporters.

Inflation expectations have been improving for five quarters in a row – in Q4 2023 the expected annual inflation rate was 11.3%, compared to 14.8% in the previous quarter. Almost a quarter of those surveyed (24.8%) expected inflation to range between 7.6% and 10.0%

A total of 83.0% of respondents continued to believe ongoing hostilities to be the most important inflation driver. Meanwhile, the impact of higher household income and budgetary social spending increased further, by 3.2 pp and 1.8 pp respectively. Conversely, the impact of tax changes and the exchange rate of the hryvnia decreased by 6.3 pp and 4.1 pp respectively.

Respondents slightly worsened their depreciation expectations – the average UAH/USD exchange rate was projected to hit UAH 40.06 per USD 1 in 12 months (UAH 40.00 per USD 1 in the previous quarter). Over half of the respondents (55.4% compared to 56.5% in Q3) expected that the UAH/USD exchange rate would not exceed UAH 40.00 per USD 1 over the next 12 months.

Companies’ current standings and their business outlook

Although improving gradually, companies’ current financial and economic standings remained weak, the balance of responses was (-5.6%), up from (-5.8%) in Q3.

Respondents reported guarded views about an improvement in the financial and economic standings of their companies over the next 12 months, the balance of responses being 4.1%, down from 6.0% in Q3 2023. An improvement in financial and economic standings was expected across most sectors, and most of all by respondents from manufacturing and construction companies (balances of responses of 11.8% and 9.5% respectively).

Businesses remained upbeat about total sales, including external sales, the balances of responses being 10.6% and 9.7% respectively, compared to 16.8% and 10.6% in Q3. Respondents across all sectors expected growth in total sales, with mining, manufacturing and trading companies being the most confident of it (with balances of responses of 20.0%, 15.7% and 14.4% respectively).

For three quarters running, respondents have reported a positive, albeit slightly more guarded, investment outlook for machinery, equipment and tools, the balance of responses being 6.6%, compared to 8.8% in Q3. At the same time, respondents reported more pessimistic expectations for construction investment, the balance of responses being (-6.9%), down from (-2.2%) in Q3.

Businesses that raise foreign investment were more confident about an increase in this investment over the next 12 months, the balance of responses being 11.3%, up from 7.1% in Q3. The firmest expectations were reported by energy and water supply, mining, and transport and communications companies, with balances of responses of 50.0%, 44.4% and 25.0% respectively. The share of respondents who plan to raise foreign investment in the next 12 months was 20.7%, down from 24.2% in the previous survey.

Respondents remained negative about their staff numbers in the next 12 months, the balance of responses being (-6.5%), compared to (-7.0%) in Q3. The dimmest expectations were reported by respondents from mining, construction, and transport and communications companies, the balances of responses being (-27.3%), (-23.8%) and (-20.0%) respectively. At the same time, respondents from trading companies and respondents engaged in other economic activities said they intended to hire more staff.

Respondents expected wage costs per staff member to rise at a faster pace, the balance of responses being 57.9%, compared to 47.2% in Q3.

The percentage of companies that plan to take out bank loans remained practically unchanged (36.0%, compared to 36.1% in Q3), despite companies’ weaker expectations of their borrowing needs in the near future.

Companies that intend to take out loans prefer hryvnia loans – 80.3%, compared to 82.0% in Q3.

High loan rates remained the main factor deterring businesses from taking out new loans (46.6% of responses). At the same time, the impact of the availability of other funding sources was reported to have increased (by 1.3 pp, to 40.2%).

The percentage of respondents who intend to take out foreign loans was 7.8%, down from 8.2% in the previous quarter.


This survey was carried out from 31 October through 28 November 2023. A total of 659 companies in 21 oblasts took part in the survey (excluding the temporarily occupied territory of Crimea, as well as Donetsk, Luhansk and Kherson oblasts). Of the businesses polled, 21.4% were in wholesale and retail trade, 18.1% in manufacturing, 14.6% in agriculture, 13.8% in transport and communications, 7.0% in mining, 4.6% in energy and water supplies, 3.2% in construction, and 17.5% were in other sectors; 29.3% of the respondents were large companies, 37.8% medium companies, and 32.9% small companies. The findings presented reflect only the opinions of the respondents (top managers of Ukrainian companies), and should not be considered as NBU assessments.

The business outlook index is an aggregated indicator for companies’ performance expectations over the next 12 months. It is calculated on the basis of survey findings as the arithmetic mean of the balances of responses regarding companies’ financial and economic standings, total sales of their own products, investment spending on construction, machinery, equipment and tools, and staff numbers. An index above 100 indicates that positive economic sentiment prevails in society, while an index below 100 shows that negative economic sentiment prevails.


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