The business environment continues to reduce the number of employees and aggravate the problem of finding qualified personnel, which may become a key factor for the Ukrainian economy in the next months.
These are the main results of the New Monthly Enterprises Survey (#NRES) of the Institute for Economic Research and Policy Consulting (IER).
According to them, in May the rating of obstacles for business has not undergone significant changes. The top three among them have remained unchanged for several months: the danger of working (an obstacle for 56% of respondents), labor shortages (49%), and rising prices (46%).
“56% said that the danger of doing business is the biggest obstacle – and such a high figure was not even at the beginning of the war. Large businesses complain most about this. Also, the problem of electricity supply has been actualized again: compared to April, twice as many businesses complain about it (21% – in April, 41% – in May),” the study quotes the words of IEI expert Eugene Angel.
At the same time, the IEI noted that for the first time in two years the percentage of Ukrainian industrial business operating at full capacity exceeded 15% and amounted to 18% in May, while in April the figure was 13%.
In addition, the percentage of companies that find it difficult to guess what will happen to operations in two years has decreased – from 38.2% in April to 30.9% in May.
The two-year uncertainty rate has been gradually declining since February of this year. Then it was 50.6%, now it is 30.9% and it is the lowest value since October 2022.
The IEI emphasized that a clear trend of stagnation or decline in positive expectations for the two-year period is noticeable.
“That is, businesses understand what they will be doing in two years’ time, but they don’t see that future as positive. Most likely because it is getting more and more used to the view that the war will last a long time,” explained Oksana Kuzyakiv, executive director of the IEI.
At the same time, she added that assessments of the financial and economic situation at enterprises and the general economic environment are growing in the six-month perspective. Accordingly, respondents do not expect deterioration of the situation either at their own enterprises or in the country’s economy as a whole.
Enterprises have had a stable order book for more than three months for almost a year now. The average term of new orders in May amounted to 3.4 months, which is slightly longer than in April (3.3 months), but corresponds to the level of March this year (3.4 months).
In addition, the Business Activity Recovery Index (BAI) increased from 0.33 to 0.40 (on a scale of -1 to +1) in May 2024 compared to April. As explained in the IEI, this was due to an increase in the proportion of businesses that reported that their business activity was better than in 2023, from 45.3% in April to 55.4% in May. Meanwhile, 15.1% (12% in April) said business activity had worsened, with nothing changed for 29.4% (42.7% a month earlier).
The May NRES survey included 534 Ukrainian industrial enterprises of all sizes located in 21 of Ukraine’s 27 regions. The field phase of the 25th wave of the survey lasted from May 20 to May 31, 2024.
