According to the data provided by Info Sapiens “Consumer confidence of Ukrainians”, conducted by Info Sapiens and financially supported by Dragon Capital, the Consumer Confidence Index (CCI) equals 66.2 in April, which is 6.8 points lower than in March. The following Indicator`s components have changed the most: Indices of Propensity to Consume and Expectations of the Country’s Economic Development in one year.
In April 2020 the Consumer Confidence Index (CCI) equaled 66.2, that is 6.8 points lower than the indicator in March.
Index of the Current Situation (ICS) decreased by 18.4 points to the level of 48.8. The components of this index have changed as follows:
- – Index of Current Personal Financial Standing (х1) equaled 52.3, which is 7.8 points lower than the indicator in March;
- – Index of Propensity to Consume (х5) decreased by 29.0 p. and reached the indicator of 45.3.
In April, Index of Economic Expectations (ІЕE) increased insignificantly by 0.9 points to the level of 77.8. The components of this index have changed as follows:
- – Index of Expected Changes in Personal Financial Standing (х2) decreased by 5.3 points comparing to the previous month and equals 69.7;
- – Index of Expectations of the Country’s Economic Development Over the Next Year (х3) decreased by 13.4 points and equals 54.5;
- – Index of Expectations of the Country’s Economic Development over the Next 5 Years (х4) increased to the level of 109.1, which is 21.4 points higher than in March.
In April, the indicator of Index of Expectations of Changes in Unemployment equaled 168.9, which is 35.5 p. higher than previous month. Index of Inflationary Expectations decreased to the level of 172.7, which is 12.7 points lower than last month. Expectations of Ukrainians regarding the hryvna’s exchange rate in the coming three months have improved: Index of Devaluation Expectations decreased by 7.2 points and reached the level of 146.8.
«The Consumer Confidence Index lost 7 more points during the second month of the quarantine. Such loss is not big comparing with negative dynamics of the CCI in March-April in European countries. Namely, in Poland and Hungary the Index decreased by 37 p., in Germany – 26 p., in Spain – 13 p., Italy – 13 p. . The propensity of Ukrainians to believe in the short-term nature of the crisis (in the perspective of one year) and optimistic expectations about economic development in the next 5 years keeps consumer confidence from rapid decline. At the same time, the most sensitive to the current crisis was the Index of Propensity to Consume: the April value of this index is the lowest for the period June 2014-April 2020. Approximately the same level of this Index was observed in July-August 2015. The decrease of propensity to consume indicates a strong sense of uncertainty among consumers and a strategy of cautious consumer behavior.» - Info Sapiens analysts comment.
How the indices are calculated
The survey «Consumer confidence in Ukraine» was conducted by GfK Ukraine since June 2000. From 2019 this project is provided by Info Sapiens. From January 2009 consumer confidence survey is conducted on a monthly basis.
In Ukraine, the Consumer Confidence Index is determined through a random survey of domestic households. The poll involves 1,000 individuals aged 16+. (Up to April 2014 the poll involved 1,000 respondents aged 15-59). A representative sample is selected by gender and age, also by type and size of settlement. In April 2014 Autonomous Republic of Crimea was excluded from the sample of consumer confidence research in Ukraine. The margin of error is 3.2%. In April 2020, the survey was conducted via telephone. Dates of the interviews: 9-20 of April.
To define the CCI, respondents are asked these questions:
- 1. How has the financial standing of your family changed over the last six months?
- 2. How do you think your family’s financial standing will change in the next six months?
- 3. Looking at economic conditions in the country as a whole, do you think the next 12 months will be good or bad?
- 4. Looking at the next five years, will they be good ones or bad ones for the country’s economy?
- 5. In terms of large purchases for your home, do you think now is generally a good time or a bad time to make such purchases?
Each of these questions is related to a corresponding index:
- • index of Current Personal Financial Standing (x1);
- • index of Expected Changes in Personal Financial Standing (x2);
- • index of Expected Economic Conditions in the Country Over the Next Year (x3);
- • index of Expected Economic Conditions in the Country Over the Next 5 Years (x4);
- • index of Propensity to Consume (x5).
Indices are constructed thus: the share of negative answers is deducted from the share of positive answers, and 100 is added to this difference in order to eliminate negative values. On the basis of these five indices, three aggregate indices are calculated:
- • consumer Confidence Index (CCI) as the arithmetic average of indices x1–x5;
- • index of the Current Situation (ICS) as the arithmetic average of indices x1 and x5;
- • index of Economic Expectations (IEE) as the arithmetic average of indices x2, x3, and x4.
Index values range from 0 to 200. The index equals 200 when all respondents positively assess the economic situation. It totals 100 when the shares of positive and negative assessments are equal. Indices of less than 100 indicate the prevalence of negative assessments. To determine the Index of Expected Changes in Unemployment (IECU), the Index of Inflationary Expectations (IIE) and the Index of Devaluation Expectations (IDE), the respondents are asked these three questions:
- 1. Do you think that within next 12 months the number of unemployed (people who do not have job and are looking for work) will increase, will remain roughly the same, or will decrease?
- 2. How do you think that prices for major consumer goods and services will change in the next 1–2 months?
- 3. How do you think the USD value will change towards the UAH value during the next 3 months?
The IECU, the IIE and the IDE are calculated thus: the share of answers that indicate a decrease of unemployment/inflation/devaluation is subtracted from the share of answers that indicate the growth of unemployment/inflation/devaluation, and 100 is added to the difference to eliminate negative values. The values of indices can vary from 0 to 200. The index totals 200 when all residents expect an increase in unemployment/inflation/devaluation.