After two months of stable performance, the index of business activity recovery (IER) in January decreased by 7 p.p. to 43%, according to the 21st NRES (New Monthly Enterprises Survey) conducted by the Institute for Economic Research and Policy Consulting (IER).
“In addition to the growing uncertainty related to export prospects, the surveyed enterprises report a direct reduction in exports. Thus, in January, 34% of respondents had to reduce exports (in December, the number was 20%). The share of enterprises reporting export growth decreased from 31% in December to 19% in January,” the IER reports.
According to the published information, the share of enterprises that reduced production volumes increased from 16.8% in December to 23.2% in January, and the share of enterprises that increased production volumes decreased from 34.4% to 23.2%.
It is noted that employment rates have also slightly decreased: 2.7% of respondents plan to increase it (5.1% in December), 11.5% intend to reduce the number of employees (6.7% in December), and 85.8% do not expect changes in employment (88.3% a month earlier).
The business itself is experiencing problems with finding qualified employees – 32.4% of companies have difficulty finding such employees (29.1% in December). Although, according to Oksana Kuziakiv, Executive Director of the IER, the decline in employment may be a seasonal trend.
Among the obstacles to growth, the first place in the list of obstacles is shared by “working dangerously” and rising prices for raw materials: 46% of respondents indicated them.
Lack of labor moved from second to third place in the list of barriers with a decrease from 46% to 41%, and power outages moved from fifth to seventh place (from 30% to 26%).
Corruption and pressure from law enforcement agencies are still not significant problems: in January, they were reported as obstacles by 7% of respondents.
In addition, more than a fifth of the surveyed Ukrainian enterprises named the lifting of the blockade of the western borders as an expected change needed to improve the business climate in the country.
As for the results of 2023, 56% of the surveyed enterprises said that the previous year met their expectations, and for 8% it even exceeded their expectations. At the same time, the IER clarifies that there is a connection between the compliance of 2023 with expectations and the size of the enterprise. Thus, 77% of large enterprises called 2023 expected or exceeding their expectations. At the same time, only 54% of microbusinesses said the same.
“The result we got is quite optimistic. I did not expect to see such figures given the turbulence and events that Ukrainian business experienced in 2023. This means that most companies are realistic about planning,” Kuziakiv commented on the results.
The survey, which was conducted from January 16 to January 31, 2024, involved 552 enterprises from 21 regions of Ukraine operating in the industrial, retail and agribusiness sectors.
