Uncertainty in Ukraine’s Business Environment: Expectations for the Short Term and Survival Strategies
The Ukrainian business sector again finds itself at a crossroads of uncertainty, primarily driven by the ongoing war and constant fluctuations in the economic landscape.
According to the latest survey conducted by the Institute of Economic Studies, nearly 90% of entrepreneurs emphasize that their main hope is the swift conclusion of the conflict, as this event is considered crucial for stabilizing their operations and fostering future growth.The survey results reveal that the three most significant obstacles to business development remain unchanged: severe shortages of labor, ongoing security issues, and rapid increases in commodity and service prices.
While these problems are not new, their levels and impacts on the business environment remain consistently high.
In July 2023, a notable increase was observed in companies reporting difficulties in finding workers—more than 60% cited this as their most pressing challenge.Additionally, rising prices have become the top concern, with a surge from 40% to 52%.
This 12% increase reflects how critical inflation and cost increases are for enterprises, directly affecting their competitiveness and pricing strategies.Logistics remains another vital issue.
Nearly a quarter of businesses face challenges transporting raw materials and finished goods within Ukraine, while 15% reported disruptions in supply chains.
Furthermore, up to 10% of companies had to halt operations temporarily due to power outages, exacerbating their difficulties.Regional disparities are evident: the Sumy region, bordering Russia, continues to suffer from infrastructure damage and high productivity losses.
In contrast, most other regions experienced reduced downtime in July, promising a gradual recovery of industrial activity.The level of uncertainty about the future remains high, particularly concerning war-related threats.
Over half of the participants (52%) expressed concerns over safety and potential threats, and 25% criticized the government’s actions negatively impacting business.
Despite these pressures, Ukrainian businesses keep operating and even investing, demonstrating resilience amid adversity.Regarding short-term outlooks, improvements are visible.
Over 21% of companies reported increased business activity in August compared to last year, suggesting potential positive shifts.
However, long-term uncertainty continues to hinder large investments and innovation, leading to a predominantly short-term focus among entrepreneurs.Overall, Ukrainian business remains under significant strain, but some optimism persists.
Entrepreneurs are preparing for a future when the war ends, which they believe will trigger economic revival.
Still, persistent uncertainty demands strategic flexibility and adaptive approaches to navigate the ongoing challenges of wartime economics.