Belarus’ business climate index declines due to pessimistic expectations of changing production volumes and demand

<p> MINSK, Dec 4 - PrimePress. The Business Climate Index (BCI) of the National Bank of Belarus fell by 3.2 p.p. to minus 7.2% in August-October compared to May-July 2020 due to growing pessimistic expectations of respondents regarding changes in production and demand in the next three months, while the decline in these indicators slowed down, reads the NBB analytical review for August-October 2020. </p> <p>   </p> <p> The BCI index, adjusted for seasonal factors, increased in comparison with the previous three months by 5.7 p.p. and stood at minus 7.1%. </p> <p>   </p> <p> The economic situation in August-October 2020 slightly improved compared to the previous three months: 52.3% of company CEOs said it was favourable (47.6% in May-July 2020), while 46.1% of respondents said it was unfavourable (50.8%). </p> <p>   </p> <p> The economic situation of their company was described as satisfactory by 69.4% of company directors and as poor by 20.8% (three months earlier, 68.1% and 23% respectively). </p> <p>   </p> <p> Demand for products and production volumes is decreasing </p> <p>   </p> <p> Company CEOs estimate that demand has slowed down in the last three months. The balance of answers to this question was minus 12% (minus 18.9% in the previous reporting period). Industrial companies noted a significant slowdown in demand (the balance of answers rose from minus 15.2% in May-July 2020 to minus 3.1% in August-October 2020), trade (from minus 27.5% to minus 17.4%) and transport (from minus 32.3% to minus 18.3%). At the same time, construction companies indicated a decline in demand in August-October 2020 - the balance of answers to the question regarding changes in demand fell by 12.3 p.p. and amounted to minus 20.3%. </p> <p>   </p> <p> In August-October 2020, heads of companies noted a slowdown in the rate of decline in the actual volume of production (contract work, transportation services, goods turnover) after its significant decline at the beginning of the year: the balance of answers increased by 4.1 p.p. compared to May-July 2020 and amounted to minus 7.4%. </p> <p>   </p> <p> Factors limiting production growth were the lack of cash income to finance current operations (47.3% of respondents), consumer defaults (46.6%), as well as a shortage of working capital (42.8%) and insufficient demand for products (36.9%). </p> <p>   </p> <p> In August-October 2020, compared to the previous three-month period, the decline in physical sales slowed down: the balance of answers was minus 1.6% (May-July 2020 - minus 7.1%). Inventories of unsold products (objects with construction delays, goods unsold for more than three months) decreased for all the analyzed types of activity, in general, the balance of answers on this issue was minus 9.5%. </p> <p>   </p> <p> More than half of companies need turnover capital </p> <p>   </p> <p> In August-October 2020, 54.8% of enterprises participating in the poll reported a shortage of working capital (May-July 2020 - 54.9%). Most managers assessed the impact of lending conditions on the economic activity of enterprises as moderate (56.8% of the total number of survey participants). Among the credit conditions that have deteriorated over the past three months, 18.3% of respondents mentioned changes in the cost of loans, and 23.3% mentioned changes in loan conditions. </p> <p>   </p> <p> In August-October 2020, 70.8% of the CEOs polled spoke in favour of maintaining the Belarusian ruble exchange rate at the current level as the desired exchange rate trend. The strengthening of the national currency would have been preferred by 15.7% of respondents, while 13.5% of participants in the survey indicated the desirability of Br devaluation. In August-October 2020, respondents noted the increasing influence of changes in the Belarusian ruble exchange rate on economic activity, the balance of answers on this issue increased from 10.9% to 17.5%. </p> <p>   </p> <p> Expectations of price growth </p> <p>   </p> <p> In November 2020 - January 2021, survey participants expect a decrease in production and demand, an increase in selling prices, a reduction in the number of employees and an increase in the demand for credit. </p> <p>   </p> <p> In addition, over the next three months, poll participants expect an increase in consumer prices (88.8% of respondents) and a slowdown in the depreciation of the Belarusian ruble against the Russian ruble and the US dollar. End </p> <p>   </p>

2020-12-05

Primepress