Key findings:
➢ The main business obstacles for the next three years are labor shortages, security concerns, and inflation.
➢ 85.6% of respondents plan to maintain, and 12.1% to increase, their current production levels in two years.
➢ Labor shortages remain the top constraint, cited by 58% of businesses.
➢ More than half of entrepreneurs are once again concerned about the safety risks of operating.
➢ Power outages have dropped to 10th place in the ranking of obstacles.
Entrepreneurs expect that security conditions in Ukraine—namely, the war, shelling, and threats to physical infrastructure—will have the greatest impact on their sectors over the next three years. This was noted by 58% of respondents in the 38th monthly survey conducted by the Institute for Economic Research and Policy Consulting (IER) in June among 473 industrial enterprises.
The second most influential factor is the labor shortage and changes in the labor market (49%), driven by a shrinking workforce and structural unemployment. Third is the reconstruction of infrastructure after the war (40%). Also among the top five influential trends are rising energy costs and logistics instability (33%), followed by changes in regulatory and tax policies (27%).
“Only 17% of respondents indicated that EU integration and adaptation to EU standards would impact their sector. Geopolitical and political instability was noted by 13% of businesses, the same share that pointed to the development of digital technologies. Artificial intelligence, climate challenges, and trade restrictions are expected to affect their sectors according to 7% of respondents,” said Oksana Kuziakiv, Executive Director of IER.
In June, the Business Activity Recovery Index slightly declined from 0.13 to 0.09, while the Aggregate Industry Outlook Index—which reflects short-term expectations—improved from 0.11 to 0.12.
At the same time, the level of uncertainty increased significantly. The share of respondents unable to predict the general economic environment within six months rose from 16.5% to 24.5%. Uncertainty regarding the financial and economic status of their own business increased from 15.2% to 20.7%. A similar trend is seen in the longer term.
“The share of those unable to forecast their business condition in two years rose from 28.7% to 37.4%,” said Oksana Kuziakiv. “This is influenced by geopolitical instability and increased attacks on civilian infrastructure.”
The share of entrepreneurs not expecting significant changes in production over the next two years reached its highest point since October 2022—85.6% plan to remain at current levels.
Currently, 62% of enterprises are operating at full or nearly full capacity. The share of those working at 50–74% capacity grew to 19%.
The share of enterprises that increased production in June rose (from 19.5% to 22.6%), while the share that reduced production fell (from 13.5% to 11.6%). Meanwhile, the share of enterprises planning to expand production within the next 3–4 months slightly declined (from 39.9% to 37.8%).
“We also observe a trend toward a shorter average duration of new order portfolios—in June, it dropped to 4.7 months. The peak was in August 2024, but since autumn, the duration has been declining. The longest orders are in the wood processing, chemical, and food industries (5–5.5 months), while the shortest are in the construction materials sector—3.2 months,” said Oksana Kuziakiv. This is due to a decline in the share of businesses with orders for over a year, from 15% to 12%.
Now, 42.8% of enterprises expect a significant rise in raw material prices, and 42.4% foresee increases in finished product prices—both figures are higher than in May.
In June, the share of enterprises struggling to find qualified workers slightly declined to 49.5% (-0.3 pp), while the shortage of unqualified workers dropped more significantly to 33.5% (-3.2 pp).
“Labor shortages remain the key obstacle to doing business during wartime. However, the share of respondents citing this dropped by 5 pp to 58%,” reported IER Senior Research Fellow Yevhen Angel.
While in May, both “safety risks” and “rising costs of raw materials and goods” were equally concerning for 47% of businesses, by June, more respondents indicated safety risks—53%.
“This is expected, considering increased enemy attacks on our infrastructure and industrial sites,” said Yevhen Angel.
The issue most concerns large enterprises (nearly 70%) and those in frontline regions: over 80% of respondents in Zhytomyr, Kharkiv, Vinnytsia, Poltava, Dnipropetrovsk, and Zaporizhzhia regions see unsafe conditions as a business obstacle.
In fourth place among obstacles is “reduced demand for products/services” (up from 27% to 33%).
“Power outages are becoming even less relevant. We’ve been seeing this trend for several months. In May, 7% cited it as an obstacle; in June—only 4%. This places it 10th overall,” said Yevhen Angel. This is the lowest level since the full-scale invasion began. The last time such a low share (4%) was recorded was in September 2022—before Russia’s mass attacks on energy infrastructure.
According to the study, in May, 13% of enterprises had to temporarily shut down due to outages, 51% had no such issues, and 36% continued operating despite power disruptions.
In June, there were no significant changes in business assessments of the government’s economic policy. Compared to May, the share of enterprises unable to evaluate it rose from 8% to 11%. Neutral assessments were given by 65% of businesses (+1 pp), and negative ones by 20% (-4 pp).
“From last summer to early spring, we saw a drop in the share of positive evaluations—only 2% in March. However, in April, the situation slightly improved and has remained at 4% since, though this is still very low,” said Yevhen Angel.
Regarding the role of the state for business, views remained mostly unchanged over the past quarter. The majority see the state as a “regulator”—45%, compared to 44% in March. Meanwhile, 25% see it as an “obstacle” (+2 pp). 9% view the state as a “partner” (unchanged), 3% as a “friend” (+2 pp), and 2% as an “enemy” (-1 pp).
“Large and medium businesses tend to have a more positive view of the state's role. Among large enterprises, 17% see the state as an obstacle; among medium-sized—20%. In contrast, among small businesses, as many as 37% consider the state an obstacle,” said Yevhen Angel.
The IER’s New Monthly Enterprises Survey (NRES) includes 473 Ukrainian industrial enterprises located in 21 of the 27 regions of Ukraine. The survey has been conducted monthly since May 2022.
📽 Presentation video of the June survey results –https://www.youtube.com/watch?v=uwq6I52rC38
📊 All previous surveys since July 2022 –http://www.ier.com.ua/ua/proekt_dilova_dumka/NRES_Presentations
