Business climate indicator in Uzbekistan rises strongly

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DNA

The Center for Economic Research and Reforms (CERR) conducted the third round of survey among enterprises for the June 2020, which involved 998 enterprises.

For reference: The assessment is based on the methodology of German “Business Climate Index” developed by IFO in Munich.

The survey was carried out in two directions: assessment of the businesses’ current situation and expectations of entrepreneurs regarding the prospects of the business for the next 2-3 months.

Analysis of the business climate in Uzbekistan displayed following:

The indicator of the businesses’ current situation amounted 30 points (an increase of 15 points compared to the previous month), which means that the business sentiments regarding the businesses’ current state is moderately positive (Table 1).

The indicator business expectations for the next 2-3 months amounted to 74 points (an increase of 44 points compared to previous month), that is the expectations of entrepreneurs regarding the prospects of their business development in the next 2-3 months are positive (Table 1).

The business climate indicator amounted to 51 points (an increase of 29 points compared to the previous month), that is business climate in Uzbekistan is good. From the economic development point of view, the relationship between the values of the current situation and expectations implies that the country’s economy in the next 2-3 months will experience an expansion (Figure 2).

Phases of the economic cycle of the Republic of Uzbekistan.

For reference: the assessment of similar indicator in Russia (-6) showed an increase of 3 points compared to the previous month.

The business climate assessment includes three main indicators:

Assessment of the current situation of the business. It is calculated as the difference between the answers “Good” and “Bad” as a percentage of the total sample. The value of the current situation varies from -100 points (all respondents rate the current situation as bad) to 100 points (all respondents rate the current situation as good);

Business expectations for the next 2-3 months. It is calculated as the difference between the answers “will improve” “will worsen” as a percentage of the total sample. The expectation value varies from -100 points (all respondents expect further deterioration of their business) to 100 points (all respondents expect further improvement of their businesses);

The value of the business climate is based on the average balance values of the current situation and business expectations. The value of the business climate can fluctuate between -100 points (all respondents assess the current situation as bad and expect further deterioration of their business) and 100 points (all respondents assess current situation as good and expect further improvement in their business);

Based on the relationship between indicators of the current situation and business expectations, it is possible to determine the phases of the economic cycle in the country for the next 2-3 months, (Figure 2).

If both values of the current situation and expectations are negative, then the economy in the country in the next 2-3 months will be in a state of recession.

If the value of current situation is negative, while the value of expectations is positive, then the economy in the 2-3 months will experience upturn.

If both values of the current situation and expectations are positive, then the economy in the 2-3 months will experience expansion.

If the value of the current situation is positive, while the expectation value is negative, then the economy in the next 2-3 months will demonstrate a downturn.