- In August, the Business Recovery Index rose after two months of decline – from 0.05 to 0.08.
- Production expectations improved significantly: the share of optimists grew to 46.8%.
- The average portfolio of new orders stabilized at 4.5 months.
- Main obstacles for business: labor shortages (62%), security risks and rising prices (both 52%).
- Inflation expectations increased among more than 40% of businesses.
- The share of positive assessments of government economic policy rose to 8%.
Ukrainian businesses are facing growing long-term uncertainty, despite improvements in short- and medium-term expectations and a moderate acceleration of recovery. The main obstacles remain labor shortages, security risks, and rising prices. Ending the war has become the top business expectation. These are the findings of the 40th monthly survey conducted by the Institute for Economic Research and Policy Consulting (IER) between August 19–29 among 474 industrial enterprises.
“The event ‘end of the war’ ranks first in all our semiannual measurements. It is the key factor that, according to respondents, affects business conditions. Currently, 89% mention this. In second place is tax reduction (37.6%), almost 10 percentage points lower than in January,” said IER Executive Director Oksana Kuziakiv.
The issue of labor reservation ranks third: 25.1% of respondents consider it a key measure to improve business conditions, compared to 31.9% a year ago. Respondents also mentioned support in entering new markets, finding partners and clients, deregulation, the return of Ukrainians from abroad, tax freezes, affordable loans, and direct budget support programs as measures that could improve the business environment.
In August, the Business Recovery Index rose slightly after two months of decline – from 0.05 to 0.08. A positive value close to zero indicates that compared to last year, businesses do not perceive worsening conditions but also do not see significant improvement. Traditionally, this indicator is negative only for microbusiness (-0.33), while large enterprises show the highest value (0.29).
In August, as in July, 63% of enterprises operated at full or near-full capacity. In August 2024, only 41% did so. The share grew rapidly in the second half of last year and has remained almost unchanged since January 2025.
The aggregated indicator of industrial prospects, which measures short-term plans and expected changes, rose to 0.14 – the highest since April 2024. Production expectations increased the most – from 0.38 in July to 0.49 in August. The inventory indicator remained stable, while new orders declined slightly.
Uncertainty in the three-month outlook remains largely unchanged. In the six-month horizon, uncertainty about the financial and economic situation of enterprises increased (to 21.9%), while uncertainty about the overall economic environment in the country remained steady for the third consecutive month (23.6%).
“Long-term uncertainty rose to 36.5% in August from 31.4% in July. These are respondents who do not know what will happen to their enterprises in two years,” noted Oksana Kuziakiv.
The share of businesses that do not expect significant production changes within two years decreased – from 82.8% in July to 77.8% in August. This decline was driven by an increase in those planning expansion (from 15.2% to 17.5%) and those expecting contraction (from 2% to 4.7%).
“Production expectations improved significantly: the index of expected production changes rose by 11 percentage points – to 0.49. This was due to an increase in optimists from 39% to 46.8%, while the share of pessimists remained unchanged at 4.2%. A similar trend is seen in exports, where the expected changes index rose to 0.48,” said Oksana Kuziakiv.
The only difference is that the index of current production changes remained unchanged at 0.17, while the export index grew from 0.13 to 0.21, thanks to the share of enterprises reporting increased exports rising from 23.2% to 30.2%.
The decline in the average length of new orders stopped at 4.5 months. At the same time, the share of enterprises with orders lasting a year or more grew from 8% to 10%. The longest orders were reported in woodworking (5.3 months), and the shortest in construction materials production (2.2 months).
Inflation expectations continue to rise. The share of businesses reporting higher raw material and input prices increased from 26.4% to 35.8%, while those expecting further price increases rose from 38.9% to 40.6%. A similar trend is seen with finished goods prices: 36.7% reported growth (vs. 29.6% in July), and 40% expect further growth (up from 39.3%).
The labor market continues to face significant shortages. “Recruitment problems persist. We see worsening difficulties in finding qualified staff – from 44.8% to 50.1% – and stable difficulties in finding unskilled workers: 36.3% of businesses, as in July, still report it as a problem,” said Oksana Kuziakiv.
By a significant margin, the top obstacle to doing business during wartime in August was “labor shortages due to conscription and/or employee emigration.”
“In August, labor shortages rose by 5 percentage points – to 62%. While in July this issue tied for first place (57%) with ‘unsafe working conditions,’ in August safety risks dropped to second place with 52%. At the same time, more businesses reported ‘rising prices for raw materials, inputs, and goods’ – the indicator rose sharply from 40% to 52%,” noted IER Senior Research Fellow Yevhen Anhel.
About one-third of respondents typically report “declining demand for goods and services” (28%). Other obstacles include “transportation difficulties” (23%), “supply chain disruptions” (15%), “lack of working capital” (12%), and other problems (less than 10%).
“In August, 64% of large enterprises cited ‘unsafe working conditions’ as an obstacle, compared to only 43% of microbusinesses. The regional breakdown shows a consistent trend: respondents in frontline and central regions more frequently mention safety risks, while those in western Ukraine report this least often,” added Yevhen Anhel.
In August, “disruptions in electricity, water, or heat supply” rounded out the top 10 obstacles (6%). Detailed July data show low time losses due to power outages – only 2%. Just 10% of enterprises temporarily suspended operations, 47% faced no such problems, and 43% continued working despite outages. 9% reported losing 1–10% of working time.
“In July, four sectors – light industry, metallurgy, machinery, and chemicals – lost around 3% of working time due to power outages. In the food industry this figure was only 1%, and woodworking enterprises reported no losses at all,” said Yevhen Anhel.
In August, the share of positive assessments of government economic policy, after the change of Prime Minister in July, rose from 2% to 8%, compared to the 2–5% range observed throughout the past year.
“This indicator grew significantly compared to previous months. It may be linked to increased optimism seen in business expectations over 3- and 6-month horizons. The share of neutral assessments remains high at 55%, while negative ones account for 25% – three times higher than positive,” emphasized Yevhen Anhel.
The New Monthly Enterprises Survey (#NRES) by IER covers 474 Ukrainian industrial enterprises located in 21 of Ukraine’s 27 regions. The survey has been conducted monthly since May 2022.
Video of the August Survey Results Presentation (UKRAINIAN) –
https://www.youtube.com/watch?v=rhN2LocLkHA&t=185s
All previous surveys since July 2022 –
http://www.ier.com.ua/en/proekt_dilova_dumka/NRES_Presentations
