Ukrainian business during the wartime
The Institute for Economic Research and Policy Consulting (IER) conducted the third issue of the Monthly Enterprises Survey “Ukrainian business in wartime” for July 2022. The project aims to collect rapidly information on the current economic state at the enterprise level.
The results of the survey showed that in the context of reducing the level of uncertainty (medium- and short-term outlook), enterprises’ output expectations are improving. In particular, the share of respondents who experienced a decrease in output dropped from 44.9% in June to 27.5% in July. The percentage, who are also considering reducing it almost twice, from 14.0% in June to 8.7% in July.
The share of enterprises that start to use their production capacities closer to pre-war volumes and expect new orders is growing. Specifically, 36% in July of entrepreneurs began working at nearly full production volume (17% in May, 30% in June).
Moreover, between 17.8% and 9.4%, the proportion of respondents who believe that the number of orders will decrease has decreased. Instead, the percentage of those who placed orders increased from 14.4% to 17.0%.
With respect to employment, the proportion of those expecting a decrease in the number of employees in July fell to 14.0% (in June it was 5.3%). From 21.6% to 15.8% the percentage of company representatives whose increase in the number of employees on leave was reduced.
The results show that companies are restoring raw materials and supplies, although prices are still a big issue for them. In particular, the proportion of respondents that have increased their reserves of raw materials in the past month increased from 6.9% to 7.8%, while the proportion reporting a reduction declined from 46.9% to 36.0%.
Among the main obstacles for entrepreneurs in July were the rise in prices of raw materials or supplies (62%), difficulties with the transportation of goods through Ukraine (47%), and a decrease in demand for products or services (36%). Meanwhile, only 5% of respondents have corruption issues.
At the same time, as the survey shows, the percentage of those expecting an improvement in the overall economic environment in the next 6 months decreased from 46.1% to 34.2%. But the share of those who feel that the overall economic environment will not change in the next six months has almost doubled, from 25.4% to 42.5%. Enterprises have also worsened in the evaluation of government policy. In July 2022, only 10% of business representatives rated the policy positively (19% in May and 16% in June). According to our experts, that means waiting for clear signals from the state concerning the key rules of the economic arrangement during the war.