Ukraine’s business climate worsens to 2015 levels

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More than half of CEOs of companies surveyed consider the current investment climate in the country as hostile

Ministry of Finance Ukraine Investment

The business climate of Ukraine has deteriorated to the level of 5 years ago. Photo: flight-pizza.de

In the first half of 2020, Ukraine’s investment attractiveness index is 2.51 points (for the same period in 2019 – 2.95 points) out of 5 possible and continues in the negative plane. The European Business Association reported this, citing data from a new study.

EBA Executive Director Anna Derevianko commented, “We are seeing an unprecedented drop in investor sentiment, which is on par with the post-2015 crisis mood.”

According to the survey, only 4% of CEOs surveyed companies consider the investment climate in Ukraine favorable, compared to 17% in the previous survey wave. Most, namely 62%, consider the current investment climate unfavorable, and another 34% – neutral.

Assessment of the dynamics of occupational climate also shows a negative trend. Therefore, 55% of directors saw a deteriorating investment climate compared to the previous 6 months, another 35% are confident that the business environment has not changed, and only 10% believe they have improved slightly.

Among the positive points that business leaders have noted in the last six months:

  • Land Market Launched
  • Currency liberalization
  • Cooperation with IMF continued
  • NBU discount rate
  • Fixed national currency

Traditional problems that negatively affect the business climate were named:

  • Weak judiciary
  • Lack of progress in the fight against corruption
  • Significant impact of shadow economy

In addition, new negative factors were identified, including the introduction of restrictive measures due to COVID-19, continued rotation in government, resulting in political and economic instability, increased tax pressure and changes in tax law, and suspension of reforms Is included.

Forecasts for the next six months are also not particularly optimistic, the EBA says. Only 15% of CEOs expect the investment environment to improve over the next 6 months. It is worth noting that 41% of CEOs expressed optimistic expectations during the wave of the previous survey. Nearly half, ie 44%, believe that there will be no change, and another 41% fear that doing business in Ukraine will worsen.

Half the directors hesitated whether Ukraine would be a profitable market for new investors in the next six months, and only 15% believed it would still be profitable for new investors to open a business in Ukraine.

Paypal magazine help

We previously wrote that the National Bank of Ukraine changed the calculation of figures on foreign direct investment (FDI) according to international standards.

According to the new methodology, in the first quarter of 2020, National Bank recorded net outflow of FDI in the amount of $ 1.6 billion, due to the return of reinvested income from the real sector (according to the initial methodology, net inflow was $ 540 million ).

Read: What is the most profitable business in Ukraine: rating for investors


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