Ukrainian enterprises have significantly downgraded their six-month recovery expectations and sharply slowed their recovery pace in July 2024 due to electricity problems, according to data from the monthly survey by the Institute of Economic Research and Political Consultations (IERPC).
The report reveals a steep drop in expectations for the financial and economic situation at enterprises, with the indicator falling from 0.55 in June to 0.22 in July. This is the lowest level since January 2023.
The survey also shows that the share of enterprises operating at full capacity nearly halved, signaling delays in short-term recovery. The proportion of businesses operating at 100% capacity dropped from 20% to 11%, while those at 75-99% decreased from 37% to 34%.
The business activity recovery index has decreased threefold from 0.37 to 0.13. In July, only 28.2% of businesses reported higher activity compared to the previous year, down from 50.7% in June, while those reporting worsened activity rose to 15.3% from 13.3%, with micro-enterprises faring the worst.
Electricity supply interruptions remained the primary obstacle for businesses, affecting 78% compared to 65% the previous month. This figure matches the disruptions seen in November 2022 following Russian attacks, which persisted until March 2023.
Additionally, the threat to business operations increased to 58% from 54% in June, and the lack of workforce rose to 47% from 42%.
"Labor shortages due to conscription and employee departures are now the top obstacle, replacing the rise in raw material and goods prices. Labor market issues continue to be significant, with every second business reporting a shortage of workers," said IERPC expert Yevhen Angel.
The survey also noted an increase in expectations of rising prices in the next three months, from 21.8% to 38.6%, although this factor dropped from 3rd to 4th place in the ranking of business problems.
Despite the short-term pessimism, long-term business plans have slightly improved, with the proportion of enterprises planning to expand their activities rising from 13.3% to 15.3%.
The monthly New Monthly Enterprises Survey (#NRES) by IERPC in July involved 483 Ukrainian industrial enterprises across 21 of Ukraine's 27 regions.
