The Institute for Economic Research and Policy Consulting (IER) conducted the sixth issue of the Monthly Enterprises Survey “Ukrainian business in wartime” for October 2022. The project aims to collect rapidly information on the current economic state at the enterprise level.
The results of the Survey revealed a significant deterioration in expectations and assessments of the business climate and global economic environment. Specifically, the proportion of respondents who described the company’s current financial and economic situation as poor increased from 21.1% to 26.7%. Moreover, the vast majority of respondents (73.9%) considered the company’s financial and economic situation to be worse. Missile attacks on energy infrastructure increased uncertainty in both the short term (3 months) and the long term (6 months). The proportion of respondents unable to predict how the company’s financial and economic situation will change over the six-month period, increased from 34.4% to 45.9%; and how the country’s overall economic environment will change, increased from 36.7% to 49.8%.
During October, the resumption of production slowed to its pre-war level. In particular, the share of active enterprises increased from 50% to 74% in relation to pre-war volumes: from 30% in September to 33% in October. The percentage of enterprises whose sales declined in October over September also increased from 22.5% to 23.4%.
The recovery in export activity has also slowed, even if export volumes have recovered. The share of respondents whose exports declined from 35.2% in September to 27.8% in October. At the same time, the percentage of firms that increased their exports dropped from 15.3% to 12.2%.
The rating of barriers to business continues to drive the problem of rising prices of raw materials (70%). The impact of power, water and heat outages increased 13-fold, ranking second in the list of barriers (51%). In third place was the issue of difficulties in the transportation of raw materials/ goods across the territory of Ukraine (41%).
The level of business confidence in the state is increasing, but negative assessments of government policies to support business continue to outweigh the positive ones. For the first time, the share of positive public policy assessments on business support increased for to 16% after three months (July to September 2022), previously these assessments accounted for only 10% of respondents. At the same time, one in five enterprises (21%) rated the government’s business support policy negatively.
Despite Russian terrorist attacks on energy infrastructure, Ukrainian business has positive expectations for recovery and growth for the next two years. For example, 37.5% of business owners surveyed expect to expand their activities over the next two years.