The Obstacles Business in Ukraine Faces

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Low demand and unfavorable political situation are the major obstacles for the development of industrial enterprises in Ukraine as of early 2015. Such were the results of the quarterly business survey in which Ukrainian businesses assessed the 4th quarter of 2014 conducted by the Institute for Economic Research and Policy Consulting and presented in the special “Business Climate and Reforms – Ukrainian Business Expectations in 2015” report.

When assessing the barriers to their business, more and more industrial enterprises have been indicating low demand. 62.5% of the respondents reported facing this issue. Low demand is considerably more relevant for the smaller firms – 67.3% of small enterprises listed lack of demand as a constraint, while among large enterprises the corresponding share is 56.8%.

Unfavorable political situation” is a sizeable obstacle for business in Ukraine. 58.3% of the respondents indicated this factor by which in the current conditions they clearly understand the armed conflict and the related implications for business. The percentage of the enterprises that have been affected by the political instability has increased significantly — in the previous survey they amounted to 45.9%.

The results of this survey were presented at the panel discussion “Government Assistance in the Context of Economic Freedom in Ukraine” hosted by the Institute for Economic Research and Policy Consulting and supported by the Centre for International Private Enterprise (CIPE) that took place on March 31, 2015 in Kyiv.

The panelists that included experts and researchers argued that to improve the business climate in Ukraine the policy of business stimulation should be reviewed and business should be included in the dialogue with the government. On their part, the businesses should unite in business associations to protect their interests.

The survey covered 312 industrial enterprises of the permanent panel of the “Business Surveys” project of the Institute for Economic Research and Policy Consulting. Various industries and regions of Ukraine were taken into account.

The special report “Business Climate and Reforms – Ukrainian Business Expectations in 2015” is available here (in Ukrainian).

An article by Iryna Fedets

The Institute for Economic Research and Policy Consulting - Kiev