NRES_September_17.10.2022_EN.pptx

Main economic trends
in September 2022
(according to the results of a new monthly enterprise survey)
Oksana Kuziakiv, Executive Director at the IER
Yevhen Anhel, Senior Research Fellow at the IER
Iryna Fedets, Senior Research Fellow at the IER
Kyiv, October 13, 2022

ABOUT THE NEW MONTHLY SURVEY
Survey every month
SAMPLE: 521 enterprises
were surveyed in
September
Businesses of all sizes
Geography: 21 out of 27
regions of Ukraine
Sectors: Industry +
(Retail, Agro)
Five surveys have
already been
conducted
The most recent data was
collected from September 8
to September 22, 2022
2
The New Monthly Enterprise Survey, #5, 2022

Main results
The
New
Monthly
Enterprise
Survey,
#5,
2022
 In September 2022, a significant improvement in expectations and
assessments of the economic situation and business climate was
recorded.
 Long-term uncertainty increased and short-term uncertainty decreased -
it became easier for entrepreneurs to forecast their activities in the
three-month.
 Enterprises continue to restore production volumes to pre-war levels.
 Production expectations for three months have improved significantly.
But the business is showing caution in its forecasts for an increase in the
employees' number.
 Rising prices for raw materials and supplies, difficulties transporting raw
materials or goods across Ukraine's territory, and lack of working capital
continue to top the list of obstacles to doing business.
 Export activity is recovering against the background of growing optimism
about exports.
 The main problems for exporters were queues at the western borders of
Ukraine, the impossibility of exporting by sea, and complex customs
formalities.
 Micro-business: worse results, but higher expectations.
 Only a small part of enterprises positively evaluates the state policy
regarding business support, but negative evaluations have decreased.
3

The main
obstacles
• Rising prices, logistical problems, and lack
of working capital continue to top the list
of obstacles to doing business.
• The “new” obstacle, disruption of supply
chains, immediately took the fourth
place.
• % of respondents who reported the
obstacles “it is not safe to work” and “lack
of fuel” in September was the lowest for
the entire 2022 (note that the frequency
of the “it is not safe to work” obstacle
depends on the region).
• The labor shortage problem continues to
be at a relatively low level for the
businesses.
4
63%
41%
37%
33%
30%
26%
18%
15%
9%
8%
6%
4%
4%
58%
46%
32%
31%
28%
26%
13%
5%
13%
6%
5%
2%
0% 10% 20% 30% 40% 50% 60% 70%
Rising prices for raw materials/goods
Difficulties with transportation of raw materials/goods
through the territory of Ukraine
Lack of working capital
Disruption of supply chains
Decrease in demand for products/services
Government regulation of the exchange rate
It is dangerous to work
Lack of personnel due to conscription and/or migration
Corruption
Lack of fuel
Damage to property/goods as a result of hostilities
Interruptions of electricity, water or heat supply
There were no problems
Sep.22 Aug.22

Production recovery continued in September
Positive:
• The share of enterprises operating at 75-
99% of the pre-war capacity increased -
from 36% in August to 41% in September.
• Only 2% of enterprises surveyed do not
operate (3% in August), and only 6% of
enterprises work less than 25% of
capacity (7% in August).
Mixed:
• The share of enterprises that worked at
full capacity remains low - only 8% in
September (for comparison, 15% in May,
12% in June, 10% in July, and 8% in
August).
5
0
20
40
60
80
100
May.22 Jun.22 Jul.22 Aug.22 Sep.22
% of capacity utilization compared to "before February 24,
2022", % of respondents
0% capacity utilzation up to 25%
25%-49% 50%-74%
75%-99% 100% capacity utilization

Uncertainty increased in the long term and decreased in
the short-term horizon
Half-year horizon Three-month horizon
6
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
% that no answer the questions about 6 months
changes on...
No answer on business activity in six month
No answer on economic environment in six month
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Export Production Sales Number of
workers
New orders
% that no answer about 3 months changes on...

Half-yearly expectations have improved
7
Business activity at the enterprise The overall economic situation in the
country
NB! The share of "pessimists" regarding the general economic situation in the country decreased significantly (from
22.6% to 14.0%). Some of them became "optimists" (the share of "optimists" increased only from 22.3% to 27.4%),
and some do not expect any changes (% of such respondents increased from 55.1% to 58.6%).
-0.36
-0.32
-0.20
-0.22
-0.09
0.07
0.15
0.12
0.03
0.11
-0.40
-0.30
-0.20
-0.10
0.00
0.10
0.20
May.22 Jun.22 Jul.22 Aug.22 Sep.22 Oct.22
Business activity at the enterprise
Expected business activity at the enterprise
-0.54
-0.44
-0.37
-0.28
-0.20
0.01
0.16
0.09
0.01
0.12
-0.60
-0.50
-0.40
-0.30
-0.20
-0.10
0.00
0.10
0.20
Current overall economic environment
Expected overall economic environment

Past changes and expectations for three months: the recovery trend
continues, and expectations are also optimistic
Production Export
8
NB! The share of "optimists" increased from 26.5% in August to 40.0% in September, the share of "pessimists" did not
change - 7.8% (was 7.7%), the share of those who do not expect changes decreased from 65, 8% to 52.2%.
-0.55
-0.30
-0.12
-0.09
0.05
0.12
0.22 0.24
0.20
0.32
-0.60
-0.50
-0.40
-0.30
-0.20
-0.10
0.00
0.10
0.20
0.30
0.40
Production Production exp.
-0.42
-0.48
-0.31
-0.24
-0.21
0.07
0.11
0.14 0.12
0.22
-0.60
-0.50
-0.40
-0.30
-0.20
-0.10
0.00
0.10
0.20
0.30
Export Export exp.

Past changes and three-month expectations:
increase in sales and new orders
Sales New orders
9
-0.48
-0.36
-0.16
-0.09
0.01
0.11
0.23 0.23 0.20
0.33
-0.60
-0.50
-0.40
-0.30
-0.20
-0.10
0.00
0.10
0.20
0.30
0.40
May.22 Jun.22 Jul. Aug.22 Sep.22 Oct.22
Sales Sales exp.
-0.52
-0.30
-0.19
-0.02
0.01
0.10
0.19
0.25 0.23
0.34
-0.60
-0.50
-0.40
-0.30
-0.20
-0.10
0.00
0.10
0.20
0.30
0.40
New orders New orders exp.

Businesses do not expect to increase employment,
but they do not plan to cut jobs either
The number of workers The number of workers on forced leave
10
-0.54
-0.30
-0.16
-0.09
-0.03
0.01 0.03
0.11
0.04 0.03
-0.60
-0.50
-0.40
-0.30
-0.20
-0.10
0.00
0.10
0.20
Number of workers Number of workers exp.
0.35
0.05 0.06
0.01 0.00
-0.01
-0.22
-0.14
-0.03
0.02
-0.30
-0.20
-0.10
0.00
0.10
0.20
0.30
0.40
Workers on forced leave Workers on forced leave exp.

So far, everything is calm in the labor market
Challenges in finding workers • Difficulties in finding skilled workers increased
in September, while indicators for unskilled
workers remained unchanged for the third
month in a row.
• The index of difficulties in finding skilled
workers has a positive value, which increased
from 0.06 to 0.09. The index of difficulties in
finding unskilled workers, where the value is
negative, remained unchanged and is -0.07.
11
0.24
0.18
0.06
0.09
-0.01
-0.06 -0.07 -0.07
-0.10
-0.05
0.00
0.05
0.10
0.15
0.20
0.25
0.30
Jun.22 Jul.22 Aug.22 Sep.22
Skilled workers Unskilled workers

Negative assessments of state policy have decreased
• In September 2022, the share of
positive assessments of government
policy on business support did not
change and remained low (10%).
• The balance of positive/negative
assessments has improved due to
the decrease in the share of the
enterprises that negatively assess
government policy (from 28% to
22%).
• The share of neutral assessments
increased from 51% to 57%.
12
0%
10%
20%
30%
40%
50%
60%
Positively
Neutrally
Negatively
Don't know /
Didn't answer
May June July Aug Sep

Situation and expectations of micro and small businesses
13

The situation for micro and small business
14
Micro-enterprises are characterized by
different behavior than enterprises of
other sizes:
• In September 2022, 9% of the surveyed
micro-enterprises did not resume their
work, which is a higher share than
among larger enterprises
• At the same time, micro-enterprises
have better expectations regarding
changes in their business situation
during the next six months (index in
September is +0.22)
• It is a change compared to August when
micro-enterprises had worse
expectations than the rest of the
business (the index was -0.05)
-0.20
-0.10
0.00
0.10
0.20
0.30
0.40
May.22 Jun.22 Jul.22 Aug.22 Sept.22
Expected changes of business situation
Micro Small All
18%
10% 10%
6%
16%
3%
9%
1%
8%
2%
1% 1%
16%
3%
0% 0%
9%
2% 1% 0%
0%
5%
10%
15%
20%
Micro Small Medium Large
% of enterprises that stopped their operations during the war
May.22 Jun.22 Лип.22 Aug.22 Вер.22

Export recovery
(based on survey results)
15

The war impact on export activity
• 55% of respondents were exporters as of the
beginning of 2022
• Exports continue to steadily recover in the
manufacturing sector as a whole
• For five months in a row, the share of enterprises
that stopped exporting after February 24 and could
not resume it continues to decrease
• The share of enterprises that want to start exporting
for the first time remains low - only 2% of
respondents (7% in May)
16
44%
40%
48%
61%
56%
9%
20%
26%
19%
28%
47%
40%
27%
20%
16%
0% 20% 40% 60% 80% 100% 120%
May.22
Jun.22
Jul.22
Aug.22
Sep.22
Continues exporting and never stopped
Stopped exporting after 24.02.2022, but already resumed
Stopped exporting after 24.02.2022, not resumed yet

The war impact on export activity (by size and industries)
17
• The ability to resume exports increases with the
increase in the size of the enterprise
• The best situation is in the woodworking
industry, where again (as in July) there are no
enterprises that stopped exporting and could
not resume it
• Export recovery in the chemical industry and
metallurgy intensified
• The worst situation is in machine building,
where 26% of respondents have not resumed
exports
65%
51%
33%
62%
43%
35% 37%
50%
28%
20% 25%
56%
25% 19% 13%
50%
21% 15% 9%
0%
20%
40%
60%
80%
100%
Micro Small Medium Large
Stopped exporting and have not resumed yet, by size of enterprises (%
of exporters)
27% 28%
36%
28%
0%
27%
21%
43%
29%
24%
13%
24% 19%
8%
14%
26%
6%
15%
0%
11%
19%
0%
20%
40%
60%
Chemical industry Machine building Metalworking Food industry Woodprocessing Other industries Light industry
Stopped exporting and have not resumed yet, by industry (% of exporters)
Jul.22 Aug.22 Sep.22

The war impact on export activity (impediments to exports)
18
• Logistics issues predominate among the main
obstacles for exporters: lines at the western
borders, a sea blockade, and a lack of railway
wagons/trucks/drivers
• The problem of lines has become twice as
urgent compared to May
• Compared to May, businesses experience
problems related to customs work several
times more often: complex customs
formalities and corruption
• Thanks to the recovery of production, the
business is less likely to experience the
problem of meeting demand in foreign
markets
16%
34%
5%
12%
28%
26%
17%
27%
32%
3%
13%
16%
21%
26%
28%
40%
44%
60%
0% 10% 20% 30% 40% 50% 60% 70%
Other
Inability to meed demand in foreign
markets
Corruption at Ukraine's customs
Reorientation from CIS markets
Lack of demand for enterprise's
goods/services
Lack or railway wagons/trucks/drivers
Complex customs formalities
Impossibility to export by sea
Lines at the Western border of Ukraine
Impediments to exports after 24 Feb 2022 (% of exporters)
Sep.22 May.22

The war impact on export activity (geography of exports)
19
• The European Union remains the main export
destination for Ukrainian business (81% of respondents
in September)
• The importance of other destinations is also increasing,
in particular, Turkey (5%) and Moldova (28%)
• Trade with the countries of the Eurasian Economic Union
is decreasing (24% in June and 13% in September)
• More exporters have "narrow" export geography. Every
second company exports to 2-5 countries, and every
fourth company exports to only one
5%
4%
2%
2%
24%
14%
22%
89%
0%
3%
4%
5%
13%
26%
28%
81%
0% 20% 40% 60% 80% 100%
Russia
China
EFTA
Turkey
Eurasian Economic Union
except Russia
Other countries
Moldova
European Union
Export destinations in the recent 3 months (% of
exporters)
Sep.22
Jun.22
17%
67%
12% 4%
26%
48%
15% 11%
0%
50%
100%
1 country 2-5 countries 6-10 countries 11 countries and
more
Number of export destinations in the recent 3 months (% of
exporters)
Jun.22 Sep.22

What tax reform is needed?
(based on survey results)
20

About taxes and expenses
21
2%
7%
26%
27%
31%
42%
43%
56%
0% 10% 20% 30% 40% 50% 60%
Other
No changes
Decrease of Unified Social Contribution
Decrease of Personal Income Tax
Introduction of Withdrawn Capital Tax
Decrease of Corporate Income Tax
Decrease VAT
Reform of the tax service / tax
administation
Which changes of the tax system are the most urgent
(% of respondents)
7%
35%
58%
Who should pay for education, health
care, and social welfare system? (% of
respondents)
Only citizens
Only government
Both government and citizens

New monthly survey of enterprises. Methodology
The need for comprehensive information on the economic situation is crucial for economic policy in wartime. The Institute for Economic Research and
Policy Consulting conducts a monthly enterprise survey using the Business Tendency Survey approach to quickly collect information on the current
economic state at the enterprise level. The methodology is designed to assess the situation from the “base level”: the judgments and expectations of key
economic agents such as entrepreneurs and business managers.
The monthly survey consists of two parts: the regular one and the special one. Respondents will regularly answer questions on the changes in key activity
indicators and short-term forecasts for future changes in the same indicators: output (production), sales, exports, debt, new orders, employment, etc. We
will also focus on estimates and expectations of the changes in the business climate and business activity at the enterprise in the next six months.
The special part of the Monthly survey provides information on specific topics. A special part examines the enterprises' problems, the war's impact on
production volumes, export activity, basic business needs, and the assessment of government policy.
This survey uses a panel sample that includes 500+ enterprises located in 21 of 27 regions of Ukraine, including Vinnytsya, Volyn, Dnipropetrovsk,
Zhytomyr, Zakarpattya, Zaporizhzhya, Ivano-Frankivsk, Kyiv, Kirovohrad, Lviv, Mykolayiv, Odesa, Poltava, Rivne, Sumy, Ternopil, Khmelnytskyy, Cherkasy,
Chernivtsi and Chernihiv regions and the Kyiv city.
The field stage of the fifth wave lasted from September 8 to September 22, 2022. The enterprises' managers compared the results of work in August 2022
with July 2022, assessed the state of indicators at the time of the survey (September 2022), and gave forecasts for the next two, three, or six months
depending on the question. For some questions (where it was mentioned) the work results were compared to ones in the pre-war period (before February
24, 2022). Respondents gave forecasts for the next three months of work.
22

CONTACTS
23
• website: www.ier.com.ua
• e-mail: rubanik@ier.kyiv.ua
• kuziakiv@ier.kyiv.ua
• Facebook: https://www.facebook.com/IER.Kyiv/
• Twitter (in English only): https://twitter.com/IER_Kyiv

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