Despite the positive state of the business climate, enterprises are revising their estimates — CERR survey

Despite the positive state of the business climate, enterprises are revising their estimates — CERR survey

In September, the business climate indicator, which the Center for Economic Research and Reforms (CERR) calculates based on a large-scale survey of enterprises, decreased relative to last month's levels.

Business is returning to the natural level of a long-term trend. If in August the consolidated business climate indicator showed a rapid decline of 10 points from 65 to 55 points, then in September there was a slowdown in the rate of decline, and the consolidated indicator decreased by only 2 points to 53, which assesses the situation in the country as positive.

In September, the decline in the consolidated business climate indicator was significantly influenced by the dynamics in the sectors of agriculture (–13 points) and construction (–11 points).

On the contrary, the indicator of the business climate in the industrial sector increased significantly over the month by 13 points, while the service sector showed a slight decrease of 2 points.

In September, the balance improved in the current estimates.

Estimates of the current state of business for the month increased by 8 points to 46, which is explained by a significant improvement in the current state in the construction sector by 22 points, industry by 17 and services by 12.

The share of respondents who noted the current state of business as "good" was 45% against 13% who noted it as "bad". 23% of enterprises increased the number of their employees, and 46% noted an increase in demand.

Business expectations have been steadily deteriorating for the second month in a row.

Estimates of business expectations regarding the prospects for development in the next 3 months fell by 13 points to 61, which is mainly due to negative assessments of entrepreneurs from the construction sector, where optimism for the month fell by 46 values.

The balance in estimates of expectations regarding demand and employment remains at a high level.

Despite a slight decrease, the share of entrepreneurs expecting business improvement in the next 3 months in September was 69%. 61% expect a further increase in demand for goods and services, and 59% plan to increase the number of employees.

In general, the relationship between the indicators of the current situation and expectations means that the positive trend in economic development will continue in the next 3 months.

Assessments of the factors of business conditions – tax burden, tax administration, access to finance and land plots – remained more negative.

In September, the share of entrepreneurs facing barriers increased slightly by 2 percentage points to 48%. As the most pressing problems, business cites difficulties in accessing finance and land plots, problems related to tax administration, electricity supply and high tax rates.

According to estimates of enterprises from the industry, construction, as well as the service sector, problems in accessing finance have become more frequent. While representatives of agriculture began to worry more about the problems associated with the acquisition of land plots.

At the same time, the industrial sector announced a reduction in obstacles to electricity supply, and enterprises in the agricultural sector noted a reduction in tax administration problems.

CERR monthly publishes a series of information and analytical materials based on the results of surveys of the business climate of the real sector, the service sector and business activity. Short-term qualitative assessments of the state of business are conducted on the basis of surveys and monitoring of regional activity. From January 2023 the Business Climate Index of Uzbekistan is published on the international economic portal Trading Economics.

Feruzbek Davletov, CERR
Phone.: (+998) 78 150-02-02 (416)

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