By Oksana Kuziakiv, IER executive director

1. The economic situation in Ukraine in
COVID-19 reality
20th Ukraine Breakfast Debate: COVID-19 in Ukraine: Economic
Consequences for Foreign Investment and Local Businesses?
IEP-EIB Breakfast Debate Series
Oksana Kuziakiv,
Executive Director of the IER
November 5, 2020

2. Macroeconomic situation in Ukraine
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3
GDP IKSO
% real change year-on year
• Ukrainian economy slowed in the
winter 2019-2020 and went into freefall
in spring 2020
• Economic activity was hit by low
external demand, quarantine measures
and uncertainty over future prospects
• Index of key sectors output calculated
by the NBU (IKSO) shows some
improvement in the third quarter of
2020 but recession continues
GDP growth and output in key sectors in Ukraine
Source: Ukrstat, NBU

3. Some sectors
recovered fairly
quickly
• Retail sales returned to
growth in June and
posted double-digit
increase in September
• Increases in government
spending supported
construction in the third
quarter
Construction and retail sales
-20
-10
0
10
20
30
40
Jan-19
Feb-19
Mar-19
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Construction output index Retail sales at comparable prices
% change yoy
Source: Ukrstat, NBU

4. Other sectors
fared less well
• Industrial output
remained lower than
in 2019 in part due to
low external demand
• Unfavourable weather
conditions led to
falling agricultural
output
-20
-15
-10
-5
0
5
10
-40
-30
-20
-10
0
10
20
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Agricultural output index (left scale) Industrial output index (right scale)
% change yoy
Output in agriculture and industry
Source: Ukrstat, NBU

5. Business tendency survey shows some positive signals
-0.25
-0.2
-0.15
-0.1
-0.05
0
0.05
Q403
Q304
Q205
Q106
Q406
Q307
Q208
Q109
Q409
Q310
Q211
Q112
Q412
Q313
Q214
Q115
Q415
Q316
Q217
Q118
Q418
Q319
Q220
IER Industrial Confidence Indicator
(seasonally adjusted trend)
-0.8
-0.6
-0.4
-0.2
0
0.2
0.4
0.6
Apr.14
Jul.14
Oct.14
Feb.15
Apr.15
Jul.15
Oct.15
Feb.16
Apr.16
Jul.16
Oct.16
Feb.17
Apr.17
Jul.17
Oct.17
Feb.18
Apr.18
Jul.18
Oct.18
Feb.19
Apr.19
Jul.19
Oct.19
Feb.20
Apr.20
Jul.20
Oct.20
Business activity, indexes
Current situation 6 months Expectations
Source: IER Business Tendency Survey of 300+ industrial
enterprises, data collection July 25- August 15, 2020
9.1 10.7 5.4 12.0
70.7 72.6 75.7 60.0
20.2 16.7 18.9
28.8
0%
20%
40%
60%
80%
100%
All Small Medium Large
Expectation on business activity in two years, % of
enterprises
Decrease The same Increase

6. Business expectations reacted to quarantine immediately
The business attitudes and expectations
changed immediately when quarantine
began in Ukraine
• ABCA Business Climate Index before
March 14, 2020: +0.31.
• ABCA Business Climate Index after March
14, 2020:+0.08
• Short term expectation regarding
business activity has deteriorated
• Two years expectation remains with
changes
Source: Analytical Report “Municipal competence Index 2019”, Kyiv
2020 (based on USAID Survey of 5000+ enterprises, data collection
January 15 – April 10, 2020)
0.06
-0.09
0.42
0.04
-0.10
-0.29
0.31
-0.10
0.43
0.51
0.21
0.08
UNTIL 14 MARCH 2020 SINCE 15 MARCH 2020
Current financial and economic conditions
Expected changes of the financial and economic conditions (next 6 months)
Assessment of current business situation
Expectations (plans) for business activity (next 6 months)
Expectations (plans) for business activity (next 2 years)
ABCA Business Climate Index

7. 13.2
60.3
23.3
2.5 .8
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
Do not work
month and
more
The decreased
amount of
activity
No changes in
the amount of
activity
The increased
amount of
activity
Do not know
Changes in business activity due to COVID-19, %
of enterprises
COVID-19 impact on business activity: results of the survey
Source: IER Survey of 1000+ enterprises involved in foreign trade, data collection April 25- June 10, 2020
45.8
22.4
16.7
11.3
3.9
Remote work in April-June 2020 % of
enterprises
Part of staff work remote
Almost all staff work remote
No remote work: technical impossible
No remote work: it is not necessary
Other

8. COVID-19 impact on business activity: results of the survey
Source: IER Business Tendency Survey of 300+ industrial
enterprises, data collection July 25- August 15, 2020
64.0
61.5
58.7
56.7
56.3
44.5
42.9
19.0
Demand for products
Situation with raw materials
New financial problems
Work schedule of the enterprise
Logistics (transportation) of goods
Production processes
Management processes
Number of employees
Over the last six months, have the following changes taken place at
your enterprise?, %
19.4
43.7
36.8
0
10
20
30
40
50
Yes, it has never
been so bad
No, it was worse I do not know
Can we say that now is the "worst
time" for your enterprse?, %
11.1
29.6
59.3
0
10
20
30
40
50
60
70
In half a year In a year In two years
When, do you think, these "worst times"
will end?, %

9. Business support programs of the GOU
Credit
vacation
Tax
preferences
Support for
small and
medium
businesses
Agribusiness
support
Business
information
support
Sources: https://covid19.gov.ua/prohramy-pidtrymky-biznesu

10. Oksana Kuziakiv
Kuziakiv@ier.kyiv.ua
@IER_Kyiv
www.ier.com.ua IER.Kyiv
Contacts: