Ukrainian businesses markedly downgraded their expectations for their performance on the back of tighter quarantine restrictions and the decline in economic activity usual at the start of the year. This is evidenced by the business activity expectations index (BAEI), which the National Bank of Ukraine (NBU) calculates on a monthly basis.
The index was 37.6 in January 2021, down from 45.5 in December 2020. For 11 months in a row – since March 2020 – companies’ expectations have been below the equilibrium value of 50 points. Companies across all of the surveyed sectors reported considerably dimmer expectations for their business performance.
Trading companies were hit the most by tighter anti-epidemic restrictions amid the decline in economic activity usual in the first month of the year. These companies expected a sharp decrease in trade turnover and a dramatic decline in their performance, the sector’s DI being 33.3, compared to 48.5 in December 2020.
Companies in the services sector also reported gloomier performance prospects due to the lockdown, expecting a drop in the amount of provided services and the number of new orders. The sector’s index was 39.7, down from 45.3 in December 2020.
Companies in the industrial sector said they were more downbeat about their business performance, the sector’s DI being 38.6, down from 44.6 in December 2020. Industrial companies reported significantly dimmer expectations for the amount of manufactured goods, the number of new orders for products, and for raw material and supplies stocks and prices.
Expectations of (housing) construction companies remained gloomier than those of companies in all other sectors. The sector’s index was 33.1, down from 39.1 in December 2020. Construction companies expect a sharp drop in construction volumes and the number of new orders. They also report firmer expectations for a rise in contractor prices and dimmer expectations for the availability of contractors.
Companies across all sectors expect a rise in their selling prices on the back of higher raw material and supplies prices. They also report intentions to continue to lay off staff.