Ukrainian businesses in December 2023 rank danger as top concern – survey

In December 2023, Ukrainian businesses considered danger to be the most important problem, but entrepreneurs continued to adapt to work in war conditions.

The findings from the 20th round of the "New Monthly Survey of Ukrainian Enterprises," conducted by the Institute of Economic Research and Political Consultations, have been released.

The survey has been conducted on a monthly basis by the Institute of Economic Research and Political Consultations since May 2022.

As noted by the survey:

• Ukrainian businesses' security concerns are increasing,
• long-term plans are falling apart,
• and the level of uncertainty remains quite high.

However, regardless of all these factors, Ukrainian enterprises demonstrate resilience and focus on finding solutions to problems — both current and the near future.

These are the main conclusions of the 20th December NRES (New Monthly Enterprises Survey), during which 535 Ukrainian business representatives were interviewed.

"In December 2023, Ukrainian business continued to recover, although the share of entrepreneurs considering expanding their activities in the next two years decreased.

At the same time, for the first time in more than 1.5 years of this survey, the business indicated the danger to its work as the main problem in its activity.

According to entrepreneurs, the second place among business problems is the lack of personnel," said Oksana Kuziakiv, executive director of the Institute of Economic Research and Political Consultations and head of the Institute of Economic Research and Center for Research of Modern Society.

In December, for the first time in recent months, business expectations for the next two years worsened, but "optimists" still outnumber "pessimists."

The percentage of those who plan to expand their activities decreased from 24.2% to 19.1%, and 72% of respondents do not plan to make any changes in the next two years. On the other hand, the percentage of those who predict a reduction in activity in two years has increased from 6.7% to 9.1%.

The recovery index of business activity in December 2023 remained at the same level as in November and amounted to 0.50. This indicates the continued recovery of economic activity.

In general, the recovery index of business activity illustrates the balance between a positive or negative assessment of business affairs compared to the previous year and is based on a question to enterprise managers: " How is the company doing now compared to a year ago?"

The share of enterprises that reported that their business activity had revived compared to the previous year was 63.6% in December (62.9% in November), 23.2% of those that said nothing had changed (24.6 %), and 13.2% of respondents reported a worsening of the situation (12.6%).

The dynamics of production indicators also evidence further recovery in December compared to November. The proportion of companies that saw an increase in production rose to 34.4%, up from 29.6% in November. Meanwhile, the percentage of companies experiencing a decrease in production dropped to 16.8%, down from 18.3% in November.

Business expectations for the next 3-4 months remain positive. The share of enterprises that plan to increase production in the next 3-4 months is 38.5%, and the percentage of enterprises that expected a decrease in production is only 5.3%.

In December 2023, the list of obstacles to doing business in wartime underwent significant changes. Security issues and staffing shortages ranked first and second, while rising prices moved third.

The share of respondents who identified "working in current conditions as dangerous" as an obstacle to production increased from 38% to 50%. This is the highest value for the entire time of this study (since May 2022). The share of respondents who chose "lack of personnel" as an obstacle increased from 35% in November to 46% in December.

This survey also investigated the question of how business perceives the state:

• 25% of respondents could not answer the question,
• 33% — see the state as a regulator,
• 31% — an obstacle,
• 7% call the state a partner,
• 2% is the enemy,
• 1% is a friend.

"Such a distribution of answers indicates the importance of dialogue with business when formulating state policy," said Yevhen Anhel, a senior researcher at the Institute of Economic Research .

For reference:

The field stage of the 20th wave lasted from December 15 to 31, 2023. The heads of the enterprises compared the results of work in December with November 2023, evaluated the value of the indicators at the time of the survey and gave forecasts for the next 3 or 6 months, depending on the question. In some issues, the results of the work were compared with the pre-war period (the period until February 24, 2022) or with the similar period of 2022.