Ukraine’s investment attractiveness returns to 2020 levels
Investment attractiveness of Ukraine, despite the war, returned to the level of the "covid" year of 2020 (Photo:REUTERS / Fabian Bimmer)
Ukraine’s Investment Attractiveness Index recovered slightly in the second half of 2022 to 2.48 points – comparable to the values of 2020 during the active phase of the COVID-19 pandemic.
That’s according to a new round of expert research conducted by the European Business Association, the results of which were published on Dec. 15.
In the first half of 2022, the Index fell by half a point to 2.17 points out of 5 possible.
The assessment of the current state of the investment climate remains the lowest among all components of the index. Half of the top managers quizzed consider the investment climate rather unfavorable.
Over six months, the number of respondents who consider the investment climate to be extremely unfavorable has slightly decreased from 53% to 37%. Some 8% of directors have a neutral assessment of the current investment climate, while another 5% consider it favorable.
The assessment of the six-month dynamics of the investment climate has somewhat softened compared to the previous period. Although 45% see negative dynamics, 33% believe that the business climate has not changed significantly, and 22% report that it has improved.
Over the next six months, 32% expect things to worsen, and 46% believe that the investment climate will not significantly change. At the same time, 22% of top managers predict an improvement in the first half of 2023.
Despite the war, 99% of EBA member companies plan to continue operating in the Ukrainian market in 2023, and 63% plan to invest in Ukraine even in wartime. At the same time, only 17% believe that it will be profitable for new investors to enter Ukraine.
In particular, CEOs talk about investment plans for 2023 primarily in support of their own business – in salaries, taxes, sustainable development, digital, internal processes, energy efficiency, and logistics. The most popular sectors for investment are still agriculture, IT, pharmaceuticals, transport, and FMCG. There are also entrepreneurs who have plans to invest in the military/defense sector.
The full-scale Russian invasion and war against Ukraine continues to lead the list of factors that negatively affect the investment climate, followed by attacks on the Ukrainian energy system and corruption. Among the few positive changes, business leaders highly appreciated the granting of the EU candidate status to Ukraine, the abolition of duties and quotas on Ukrainian exports, and "the transport visa-free regime" with the European Union.
"We see a certain mitigation of negative sentiments on the investment climate, which are improving mainly due to optimistic business expectations for the next six months," said Anna Derevyanko, Executive Director of the European Business Association.
“Even though the situation remains extremely difficult, most companies have found a certain point of equilibrium in which they ensure the continuity of their work as a minimum, and profitability and development as a maximum. The level of flexibility and adaptability of our business is extremely high, as well as its resilience and loyalty to Ukraine.”
The European Business Association has been researching the Investment Attractiveness Index of Ukraine since 2008. Throughout the history of measurement, the Index has never reached the positive zone – above 4 points. The current wave of the survey involved 100 directors of the largest international and Ukrainian companies.
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