Ukrainian businesses are feeling the pressure of war and are struggling to find labour as military conscription continues to drain the pool. Russia’s attack on the energy sector that has destroyed 90% of Ukraine non-nuclear installed capacity – about half of the total – has also increased concerns for the economic outlook as firms worry about where the power to run their businesses will come from this winter.

Since the beginning of the year there has been a notable rise in uncertainty, UBN reports. Compared to survey results in the first quarter, confidence in hitting sales targets this year has clearly declined as a result of the delayed US Defence aid in the first half of this year and resulting greater destruction of the energy system.

Unsurprisingly, less than half of executives (41%) remain confident of hitting 2024 targets, while even more (45%) think it’s too uncertain to know, according to a poll of business leaders.

“Confidence has fallen due to power cuts and labour issues. While in the first quarter more than 60% of companies were confident [of] hitting their 2024 sales targets, now just 41% believe they can hit their targets,” the UBN report said. “Talent management has become the top concern for businesses.”

To drive revenues this year, businesses are not relying on raising prices on their customers but instead are defending and expanding their market share, making for a very competitive environment. Some 66% of firms are relying mostly on volume sales to drive top-line growth. Only about 33% rely on a mix of volume sales and price increases to hit revenue goals.

Some 70% reported having trouble finding staff. Almost half (47%) noted that the lack of staff is forcing them to discontinue some of their offering. Another two thirds (66%) of firms are seeing costs rise “considerably” or “dramatically.”

Most firms continue to feel strong support from headquarters despite tough market dynamics, and most executives still believe the war will end in 2025; however, many are starting to believe the war will last longer than initially expected, with 46% believing the war will end in 2026 or later, UBN reported.

Nearly 60% indicated support for a land-for-peace deal, suggesting executives are getting increasingly realistic about what the likely resolution to the war at some point. As bne IntelliNews reported, Ukraine is inching towards a ceasefire as pressure on the government mounts due to the lack of men, money and arms.

“Business is difficult now, there’s no point in lying about it. But we still believe in the long-term opportunity in the market.” one head of a professional services consultancy told UBN.

Macro environment deteriorates

There fears have been reflected in the official macroeconomic outlook.

The Ukrainian government clarified its 2024 forecast last week and the Ministry of Economy updated its statistical data and revised its assumptions and forecast for Ukraine's economic and social development in 2024.

By the end of 2024, nominal GDP is expected to exceed UAH7.484 trillion ($182bn), up from the previous forecast UAH7.643 trillion, but real GDP growth forecast was downgraded to 3.5% from 4.6% previously due to the mounting energy and labour crises.

The average monthly employee salary will be UAH20,581 ($500), and the nominal salary, adjusted for inflation, will rise by 12% (previously, the average salary was forecast at the level of UAH21,809, and the increase due to inflation was 8.5%). The unemployment rate for those aged 15-70 will be 18.2% against the previously forecasted 18.7%.

The UBN survey was conducted in the second quarter 2024, with respondents all being senior executives leading multinational businesses in Ukraine.

43% are managers with responsibility for Ukraine alone, 49% covering Ukraine and some regional countries, and 8% with some Other geographical remit (that includes Ukraine).

Find a full copy of the report via the link below.

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