OREANDA-NEWS. The results of the Business Outlook Survey (BOS) conducted by the National Bank of Ukraine  in Q3 2016 suggest that the inflation expectations of Ukrainian businesses have improved significantly. The respondents expect consumer prices to rise by an average of 13.8% over the next 12 months, compared to 18.9%, the rate of inflation projected by businesses in the previous quarter.          

Businesses’ inflation expectations have been declining for six consecutive months, moving closer to the NBU’s forecast. Improvements in inflation expectations reflect both the decline of inflation to single digits and a  gradual strengthening of business confidence  in the ECB's ability to meet the inflation taget of 12% by the end of 2016 and 8% by the end of 2017.

At the same time, businesses are optimistic about the revival of economic activity. Also, following a temporary decline at the beginning of 2016, business expectations  have kept improving for the second quarter in a row. In Q3 2016, the Business Outlook Index (BOI) stood at 109.2%, the highest figure since Q1 2014.

A pick-up in business activity is expected by the respondents of all types of economic activity, except construction. As in the previous quarter, the respondents from  manufacturing and agricultural enterprises were the most optimistic in their outlook.

In the wake of positive expectations, the respondents expect their borrowing needs to increase in the nearest future. As before, about a third of respondents intend to take loans to finance their business activities. The majority of respondents plan on taking hryvnia loans.