Ukrainian businesses express greater concern for border blockade than corruption and employee mobilization reservations – survey
More than 20% of Ukrainian enterprises expect the authorities to unblock the border with Poland and other countries.
This is evidenced by the results of the monthly survey of industrial enterprises (#NRES) of the Institute for Economic Research and Policy Consulting (IER).
In January 2024, during the 21st wave of the survey, in addition to standard questions about the business climate in the country, entrepreneurs were asked for the first time about the impact of blocking borders on their businesses.
20.7% of surveyed Ukrainian enterprises named the lifting of the blockade of the western borders as the expected changes necessary to improve the business climate in Ukraine. Entrepreneurs consider the issue of unblocking borders to be more significant than corruption and insurance of war risks of business (17% of respondents each), reservation of employees from mobilization (15% of respondents), or solving issues with blocking of tax invoices (6% of respondents).
However, the expectation of unblocking the borders for business is less significant than the expectation of the end of the war (87% of respondents), reduction of taxes (44% of respondents), simplification of legal requirements for business (32% of respondents), de-occupation of the territories of Ukraine (30% of respondents) and affordable lending (25% of respondents).
Source: Monthly Business Survey (#NRES) of the Institute for Policy Research and Policy Consulting (IER)
It is also worth noting that the percentage of enterprises reporting a reduction in exports increased from 20% in December to 34% in January. At the same time, the share of enterprises reporting an increase in exports decreased from 31% in December to 19% in January.
"At the end of the year, the issue of blocking the western borders was quite a concern for Ukrainians, as it created problems not only for businesses but also for ordinary citizens. As we can see from the events of the last few days, this problem is quite relevant even now," says Yevhen Anhel, senior researcher of IER.
The survey found that long-term business expectations are improving, and uncertainty is easing. Still, the recovery in "here-and-now" business activity is stagnating amid concerns about security, labor shortages, and demand issues. Thus, in January 2024, compared to December 2023, the Business Activity Recovery Index worsened (it is calculated based on the difference in the percentage of responses to the question: which is better – "as it is now" or "as it was a year ago"). The share of businesses that reported that their business activity had improved compared to the previous year fell from 64% in December to 56% in January.
"The stagnation of the business recovery is taking place against the background of concerns about safety, lack of workers, and problems with demand. However, the decline in the index of recovery of business activity occurred at the expense of a decrease in the share of those who are "doing well" rather than an increase in the number of enterprises that are "doing badly." This is already pleasing," explains Oksana Kuziakiv, executive director of IER.
As part of the study, IER specialists surveyed 552 enterprises (mostly industrial) in 21 regions of Ukraine, operating in the industry, agribusiness, and retail sectors.
