Impact of the Situation in the East of Ukraine on Business Activity

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The survey showed that 42.3% of managers reported no change when comparing the financial situation of their company now and a year ago, 8% indicated that the situation improved, 40.7% of respondents answered that the situation has worsened, and 9% failed to answer the question.

The majority of respondents (49.8%) do not connect the worsening of the economic situation solely with the destabilization on the East: layoffs, reduced demand, problems with access to financial resources and other problems were present in the industrial sector for the past two years.

33.6% of surveyed managers reported that the destabilization of the situation in the East of Ukraine has no impact yet on the financial and economic situation of their company, 33.6% of respondents believe that it worsened, and 2% – that it significantly deteriorated. Almost a third of respondents (29.5%) could not answer the question, 1.3% reported that the situation has significantly improved due to new orders.

Answering the question on the specific difficulties that the enterprise faced due to the events in the Donetsk and Lugansk regions the managers gave the first place to the difficulties with finding clients (44.4%) followed by logistical difficulties (38.3%), difficulties in working with financial institutions (28.0%) and refusal of partners to participate in cooperation (25.5%).

Problems that the companies face as a result of the destabilization of the situation in Donetsk and Lugansk regions, % of respondents: Source: own data.

Based on results of the quarterly survey conducted by the Institute for Economic Research and Policy Consulting under the “Business Tendency Survey”. The survey covers managers in regions representing Centre, West, South and East of Ukraine and is held since 1996 based on the panel sample of 450 companies representing all sectors of manufacturing. The latest poll was conducted from July 25 to August 15, 2014.

Oksana Kuzyakiv