Ukrainian Companies Display Resilience Amid Russian Invasion
90% of Ukrainian companies have resumed work since the beginning of the Russian invasion, according to recent reports. Despite the ongoing war, businesses in Ukraine have shown remarkable resilience and have managed to adapt to the situation, maintaining financial stability. However, a majority of companies have reported financial losses, with some attributing losses of up to US$100,000 directly to the war.
The impact of the war on financial losses varied across sectors, with the construction sector suffering the most, while sectors such as agriculture, telecommunication, marketing, consulting, and design services experienced the least impact. Notably, around 84% of companies that suspended operations earlier this year have been able to partially resume their operations within just six months. Moreover, government or international aid has been crucial for the survival of half of the businesses that received such support.
Since the start of the Russian invasion, around 64% of micro-, small, and medium-sized enterprises (MSMEs) temporarily suspended or closed their operations. However, the majority of these companies have already resumed their operations, showing the resilience and determination of the Ukrainian business community.
A positive development is that as of October 2023, only 9.6% of entrepreneurs who initially suspended their activities face the risk of losing their businesses. This represents a significant improvement compared to the 46.8% of companies that were at risk of closure or suspension in June 2022. It is worth noting that these MSMEs play a crucial role in the Ukrainian economy, accounting for 99.98% of all business entities, 74% of all jobs, and 64% of total added value. However, enterprises in Ukraine’s east and south have suffered losses that are 1.5 times higher compared to those in the country’s west.
According to the United Nations Development Programme (UNDP), there are significant regional differences in the impact of the conflict. The capacity utilization of businesses, as measured by the International Health Regulations (IHR), has dropped sharply to 45.7% in 2023, but experts project an increase to 56%. This indicates that businesses are prepared to capitalize on higher demand and are ready to increase their turnover by approximately 50%. Surprisingly, only 9.5% of businesses reported no financial losses resulting from the war, while around 10% reported minor losses of up to US$10,000. The average financial loss per company is estimated to be US$227,000.
Despite the challenging financial outlook, around 77% of businesses perceive their situation as either bad or satisfactory. Nonetheless, there is still a sense of optimism and hope for post-war recovery. Many companies are forecasting the maintenance of full-time employment and are also keen on integrating internally displaced persons (IDPs) into their workforce. Furthermore, most businesses have already downsized and do not plan to further reduce their staff, recognizing them as an essential element for the gradual recovery of the economy in 2024.
Analyst comment
Positive news:
– 90% of Ukrainian companies have resumed work despite the ongoing war, showing remarkable resilience.
– Majority of companies have been able to adapt to the situation and maintain financial stability.
– 84% of previously suspended companies have partially resumed operations within 6 months.
– Government and international aid has been crucial for the survival of many businesses.
– Only 9.6% of entrepreneurs face the risk of losing their businesses as of October 2023, compared to 46.8% in June 2022.
Negative news:
– Majority of companies have reported financial losses attributed to the war, with some experiencing losses up to US$100,000.
– Construction sector suffered the most, while other sectors like agriculture, telecommunication, marketing, consulting, and design services had less impact.
– Enterprises in Ukraine’s east and south have suffered losses 1.5 times higher compared to those in the west.
– Average financial loss per company is estimated to be US$227,000.
Neutral news:
– Capacity utilization of businesses dropped sharply to 45.7% in 2023 but is projected to increase to 56%.
– Businesses are prepared to capitalize on higher demand and increase turnover by approximately 50%.
– 10% of businesses reported minor losses up to US$10,000.
– Around 77% of businesses perceive their situation as bad or satisfactory, but there is still a sense of optimism and hope for post-war recovery.
Market prognosis: Despite the ongoing war and financial losses, Ukrainian businesses have shown resilience and adaptability. With the majority of companies resuming operations and government/international aid support, there is hope for post-war recovery. However, challenges remain, especially for the construction sector and businesses in the east and south. The market is likely to gradually recover in 2024, with businesses capitalizing on higher demand and integrating internally displaced persons into their workforce.
