The Institute for Economic Research and Policy Consulting (IER) conducted the seventh issue of the Monthly Enterprises Survey "Ukrainian business in wartime" for November 2022. The project aims to collect rapidly information on the current economic state at the enterprise level.
The results of the survey showed a continuing trend towards deteriorating expectations and assessments of the business climate and the economic environment as a whole. In particular, in November, the proportion of those assessing the global economic situation declined from 5.8% to 2.1%. At the same time, the proportion of those who felt that the overall economic environment was poor decreased from 39.3% to 37.7%.
Expectations about the business and country's economic situation over the six-month period have worsened. The share of pessimists on the expected changes in the enterprise increased only slightly, from 28.8% to 30.9%, while the share of optimists declined a half-fold from 21.0% to 13.8%.
Production volumes declined compared to the previous month and expectations for the next three months deteriorated. The share of firms in which output fell slightly rose from 21.6% to 23.5%. In parallel, the share of enterprises reporting output growth fell from 17.3% in October to 8.3% in November. The percentage of firms considering increasing production over the next three months fell from 29.1% in October to 16.9% in November, while the share of those considering reducing production rose slightly from 12.4% to 13.4%.
Meanwhile, business plans for the next two years remain optimistic, even though the level of uncertainty over the two-year outlook has increased for the first time. The proportion of those planning to reduce their activity over the next two years increased in November, from 6.3% to 11.6%.
Meanwhile, the share of those planning to remain at current levels has remained almost unchanged at 56.7% (up from 56.3% in October). For the first time during this period, the uncertainty rate increased from 42.3% to 54.2%.
The level of uncertainty over the six-month period has not changed and the near-term uncertainty has decreased somewhat. The proportion of respondents unable to predict the financial and economic situation of the business over the six-month period increased from 45.9% to 43.8%, and the country's global economic environment from 49.8% to 48.7%. The percentage of uncertainty for finished product inventories after doubling in October fell 9 percentage points from 23.1% in October to 13.8% in November.
For the first time, power, water and heat failures have become the main problem. The proportion of businesses facing this problem has risen to 78%. The problem of rising prices of raw materials/raw materials/goods came second among the barriers to business (68%), and war-related risks to work third (46%).
Missile strikes have not yet had a critical impact on production volumes, even though they have slowed down the active recovery that has continued since the spring. In November, the share of enterprises operating at 100% significantly decreased from pre-war volumes to 3% (in the previous three months this figure remained at 8%). However, 43% of those surveyed were almost fully employed in November (36% in October).
Enterprises have exhausted the possibilities of actively resuming their export activities, although micro-enterprise exports have intensified. In November, 17% of companies stated that they had stopped exporting after February 24 and that they were not able to resume it. These are the levels in October (17%) and September (16%).
