The full-scale war that Russia waged against Ukraine has drastically impacted the situation in Ukraine. Many Ukrainians were forced to flee the country and seek safer regions or countries: according to estimates, about 8 million became refugees, while around 5 million are internally displaced people
IER is preparing the publication of Macroeconomic Monitoring of Ukraine.
“Keep your chin up” is the headline of the June issue of the New Monthly Enterprise Survey, a #NRES conducted by the Institute for Economic Research and Policy Consulting since May 2022. From June 15 to June 30, 2023, the heads of 530 enterprises located in 21 out of 27 regions of Ukraine answered questions about the current state of affairs at enterprises and their expectations for further business development.
A full-scale war became an existential challenge for the Ukrainian industry. Manufacturing enterprises have been forced to actively cut expenditures for innovation, shifting the focus from development to survival. At the same time, businesses see opportunities to restore innovative activity with the help of industry support programs, fiscal incentives, and other measures at the state level.
Ukraine has introduced numerous reforms between 2014-2019, which support macro-financial sustainability of the country. As a result, even during COVID-19, Ukraine went stronger with debt-to-GDP ratio at about 50%, sound banking system, improved corporate governance and higher openness and transparency. This helped Ukraine to remain resilient since the beginning of full-scale invasion by Russia.
Millions of people and thousands of businesses in Ukraine remain without electricity every day due to damage to infrastructure damage caused by Russian shelling. For two months in a row, the Russian Federation has been launching rocket attacks on the civilian infrastructure of Ukraine every week. The target of this damage was the network of substations and transformers that provide electricity transmission from generating plants.
The metallurgical and metalworking industry has been one of the pillars of the Ukraine’s economy, but the war and the sea blockade are driving it into a deep crisis. In the industry, enterprises pessimistically assess their business activity and business climate; they continue to reduce production and exports.
In August 2022, the production recovery in Ukraine continued, but the dynamics of the indicators of the economic conditions indicate a possible slowing down of the recovery trend in 6 months perspective. This is indicated by several important factors.
A month ago, Ukraine and the EU signed a road agreement that simplified road freight requirements between the parties. The arrangement proved to be mutually beneficial – trade volumes increased, and the cost of transportation from Ukraine decreased.
Ukraine’s manufacturing sector suffers war losses, but most industries keep optimism about the future. However, manufacturers that secure the basic human needs (food, clothing, and shoes) demonstrate the best production and recovery results.
