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Business has worsened economic expectations. Ukraine has gone into the spiral of stagflation—NBU

In a January poll by the National Bank of Ukraine, business representatives significantly worsened their expectations for the economic condition and activities of enterprises.

According to the poll, the index of business activity expectations in January was 37.6 against 45.5 in December, the Central Bank of the country notes.

The regulator notes that for the eleventh month in a row, the expectations of enterprises are below the equilibrium value of 50 points.

The construction industry representatives continue to give the lowest estimates of business activity—33.1 against 39.1 in December.

"Developers expect a rapid decline in construction volumes and new orders with a simultaneous rise in the cost of contractors' services and a deterioration in their availability," the NBU explains.

The trade sector representatives continue to worsen expectations. In January, the sectoral index for them was 33.3 against 48.5 in December.

"Trade enterprises felt most strongly the consequences of the anti-epidemic restrictions tightening against the background of the traditional decrease in activity in the first month of the year," the message says.

Service enterprises continue to emit a strong negative. Their index fell from 45.3 in December to 39.7 in January 2021.

Industrial enterprises, whose index fell from 44.6 in December to 38.6 in January, are negatively assessing the indicators of manufactured products, orders, inventories, and future prices for raw materials.

Against the background of deteriorating business expectations, all enterprises envisage an increase in prices for their goods and services. Decline in production with a simultaneous rise in prices is called stagflation. All industries are also determined to further reduce the number of their employees.

Recall that at the end of 2020, the industry in Ukraine decreased by 5.2%.

Consumer inflation at the end of 2020 was 5%.

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