Ukraine’s Investment Attractiveness Index falls to its lowest since 2013

08/ 08/ 2022

These are the results of the most recent study on the investment attractiveness of Ukraine conducted by the European Business Association. Half a year ago, the Index amounted to 2.73 points. For comparison, during the active phase of the Covid-19 pandemic, the Index decreased to 2.4 points, and during the Euromaidan – to 1.8 points, which is still the lowest value for the entire time of the study. It is worth noting that after the end of the Revolution of Dignity, the Index showed a noticeable jump and further growth, so we hope for similar dynamics after the end of the war. View the presentation As expected, the CEOs have worsened their assessment of the investment environment in Ukraine. The percentage of CEOs who consider it extremely unfavourable has increased tenfold – from 5% to 53% over the past six months. Another 34% consider it rather unfavourable, while 9% of CEOs gave a neutral assessment, and another 4% consider it favourable. The most positive assessments of the business environment in this wave were given by the representatives of the legal and consulting business, as well as FMCG. The assessment of the six-month dynamics of the investment climate has also significantly deteriorated. Negative dynamics are observed by 79% of investors, and another 17% believe that the business climate has not undergone significant changes. The forecasts for the next six months are slightly better. Only 38% expect further deterioration of the situation, while 36% believe that the investment climate will remain unchanged, and 26% predict its improvement by the end of the year. Despite the war, 91% of the EBA companies plan to continue working in the Ukrainian market, and 55% will invest in Ukraine even during wartime. Namely, CEOs talk about investment plans in the agricultural sector, energy, IT and telecom, construction, pharmaceuticals, FMCG, real estate, and others. Besides, 12% believe that it will be profitable for new investors to enter Ukraine this year, although 57% of respondents hesitate. As expected, russia’s military aggression against Ukraine topped the list of factors that had a negative impact on investment attractiveness, corruption came in second place, and a weak judicial system – in third. At the same time, the CEOs assessed the negative impact of Covid-19 as minimal and placed it last on this list. As for positive changes, business leaders highlighted Ukraine’s candidate status for EU accession, cancellation of customs duties and quotas for Ukrainian exports, and transport visa-free regime with the EU. Anna Derevyanko. EBA Executive Director. Although it is not surprising that assessments on business climate have worsened this year, there is still an open question to what extent the war impacted the sentiments and plans of investors. From the results obtained, we can see that the state of the investment climate was pushed back to the values of 2012-2013, even before the start of any combat actions. In my opinion, this is a decent result considering that a full-scale war is deployed in the country. This testifies to the stability of Ukrainian business and the courage of our people, as well as the fact that the reforms and positive changes of the last eight years have given us a certain margin of strength. HOW WE MEASURE THE INDEX The European Business Association has been conducting the “Investment Attractiveness Index of Ukraine” survey since 2008. Throughout its history, the Index has never reached a positive zone – above 4 points. Altogether, 102 directors of the largest international and Ukrainian companies took part in this wave of the survey.

View the presentation

As expected, the CEOs have worsened their assessment of the investment environment in Ukraine. The percentage of CEOs who consider it extremely unfavourable has increased tenfold – from 5% to 53% over the past six months. Another 34% consider it rather unfavourable, while 9% of CEOs gave a neutral assessment, and another 4% consider it favourable. The most positive assessments of the business environment in this wave were given by the representatives of the legal and consulting business, as well as FMCG.

The assessment of the six-month dynamics of the investment climate has also significantly deteriorated. Negative dynamics are observed by 79% of investors, and another 17% believe that the business climate has not undergone significant changes. The forecasts for the next six months are slightly better. Only 38% expect further deterioration of the situation, while 36% believe that the investment climate will remain unchanged, and 26% predict its improvement by the end of the year.

Despite the war, 91% of the EBA companies plan to continue working in the Ukrainian market, and 55% will invest in Ukraine even during wartime. Namely, CEOs talk about investment plans in the agricultural sector, energy, IT and telecom, construction, pharmaceuticals, FMCG, real estate, and others. Besides, 12% believe that it will be profitable for new investors to enter Ukraine this year, although 57% of respondents hesitate.

As expected, russia’s military aggression against Ukraine topped the list of factors that had a negative impact on investment attractiveness, corruption came in second place, and a weak judicial system – in third. At the same time, the CEOs assessed the negative impact of Covid-19 as minimal and placed it last on this list. As for positive changes, business leaders highlighted Ukraine’s candidate status for EU accession, cancellation of customs duties and quotas for Ukrainian exports, and transport “visa-free regime” with the EU.

Anna Derevyanko EBA Executive Director

Although it is not surprising that assessments on business climate have worsened this year, there is still an open question to what extent the war impacted the sentiments and plans of investors. From the results obtained, we can see that the state of the investment climate was pushed back to the values of 2012-2013, even before the start of any combat actions. In my opinion, this is a decent result considering that a full-scale war is deployed in the country. This testifies to the stability of Ukrainian business and the courage of our people, as well as the fact that the reforms and positive changes of the last eight years have given us a certain margin of strength.

HOW WE MEASURE THE INDEX

The European Business Association has been conducting the “Investment Attractiveness Index of Ukraine” survey since 2008. Throughout its history, the Index has never reached a positive zone – above 4 points.

Altogether, 102 directors of the largest international and Ukrainian companies took part in this wave of the survey.