A year of big questions: what will 2021 bring for business?

05/ 02/ 2021

In the first half of the year, the global and Ukrainian business communities will have to make decisions under great uncertainty. Therefore, yesterday, February 4, the European Business Association held EBA Global Outlook event to discuss key factors and trends that will shape the business environment in Ukraine and the world in 2021. View the video of the meeting Thus, during the event, the CEOs of the EBA member companies shared their forecasts and expectations about the challenges and opportunities for doing business in the new reality. Tomas Fiala, Dragon Capital “Preliminary macroeconomic data indicate that Ukraine has coped well with last years challenges. Thus, according to our estimates, GDP fell by only 4% in 2020, which is one of the best results among European countries, only Poland fell slightly less. The situation for 2021 looks quite optimistic, provided that no new strict restrictive measures will be implemented.” Thus, Mr. Fiala added that the real GDP is projected to grow by 5.3% in 2021, while nominal GDP will grow to $ 171 billion. According to Dragon Capitals estimates, the inflation rate in Ukraine will accelerate to 6.5% for the year period. At the same time, the level of the budget deficit will decrease to 5.2%. The exchange rate will be stable at about UAH 28/dollar at the end of the year. It should be noted that global GDP will return to pre-quarantine levels around mid-2021. Speaking about investments, the CEO of Dragon Capital noted that the company is currently in the process of closing 5 deals worth $ 200 million, also they are planning to attract more foreign investment to Ukraine. Also, Mr. Fiala admitted that it was encouraging to see that the NBU continues its course towards stable monetary and exchange rate policy and that the President takes active action in shutting down Russian propaganda channels. Tymofiy Mylovanov, former Minister of Economic Development, Trade and Agriculture of Ukraine & freelance adviser at the Office of the President of Ukraine Indeed, the pandemic-induced GDP contraction was not as grave as predicted. For example, the IMF predicted a slump of almost 8% (-7.7% in April and -7.2% in October). The worst situation was in the second quarter of 2020 when GDP fell by 11.4%. In general, the negative effect was due to falling external demand and high uncertainty, which led to falling and postponed domestic (consumer and investment) demand. As a result, GDP fell by 4-5%, while restrictions on business due to lockdown caused only a 1% decrease, said Mr. Mylovanov. He also supported the thesis that Ukraines economy is recovering better than expected, but in the future, the pace of recovery will depend on the speed of vaccination. The government forecasts that in 2021 Ukraines GDP will grow by 4.6%. At the end of 2021, inflation will exceed the target range, but it will be temporary, and in 2022 we will return to 5 +/- 1%. For this year, the state budget deficit to GDP will be planned at 5.5%. Besides, according to forecasts, in 2021 cooperation with the IMF will be continued. Negotiations are currently underway with representatives of the Fund, but the approval of the next tranche will depend on Ukraines implementation of its reform agreements. Marek Tomalak, PepsiCo Ukraine “In 2021, PepsiCo will continue to care for employees, adapt to a new reality and accelerate sustainable growth. We want to create more smiles for our consumers, suppliers, and customers by continuing to implement PepsiCos sustainable development program for agriculture, packaging processing, and production improvement. This will help stimulate further economic growth.” Mr. Tomalak also added that one of the companys main priorities is to reduce greenhouse gas emissions to zero by 2040 and accelerate the transition of plants to renewable energy sources. Overall, PepsiCo is quite optimistic about this year and hopes for a prompt global economic recovery. Andrey Gorokhov, UMG Investments “Last year, world prices for agricultural products and metals remained high, so Ukraine was lucky with market conditions. Much of the product was exported to China. But now we see that the authorities are beginning to impose sanctions on Chinese companies. This could lead to the loss of Ukraines trading partner, which we cannot allow happening, especially in conditions of uncertainty. Another risk factor is the large share of NPLs in the structure of the countrys economy, namely 42%, for which no plans of reduction have not yet been developed.” Mr. Gorokhov also added that, despite this, optimistic expectations still prevail in the companys forecasts. Thus, 2020 has become a record year for UMG Investments in the context of expanding its investment portfolio, and goals set for 2021 are even more ambitious. Ilia Kenigshtein, CREATIVE STATES Today, there is an intensified trend towards deglobalization, accelerated by the pandemic. Thus, large-scale companies are losing their value, and their market share is declining, so now is the finest hour for local players. The crisis has motivated the Creative States to follow the trend towards flexibility and creativity and has proven that the “work from anywhere» model is currently in demand. In 2020, the company opened two new locations, the residents of which are not only IT companies but also banks and other representatives of the real sector of the economy. The pandemic has clearly brought up a new market, so the future lies behind operators of flexible office solutions such as the Creative States. Vadim Sidoruk, DHL Express Ukraine The postal and delivery industries were the least affected by the pandemic. At the same time, the workload on companies in this sector has increased sharply, so it was quite difficult to organize the safety of employees and, at the same time, to ensure uninterrupted supplies from Ukraine to about 200 other countries. In order to quickly localize the disease among employees, the company has been constantly testing the staff, for which half a million euros have been spent since August. In the first half of 2020, there was a decline in B2B and transportation of medical supplies, but since July there has been a surge in B2C orders - about 10 thousand shipments. To guarantee the timeliness of deliveries, the company last year purchased additional aircraft and refitted commercial liners, added Mr. Sidoruk. Taras Kytsmey, SoftServe By design, the IT industry is global, thus management and communication methods between distributed teams and remote work have improved in recent decades, and the coronavirus crisis has only accelerated innovation in the digital transformation of many industries. Thats why the IT industry has resumed all of its growth processes since the third quarter of 2020. The number of vacancies continues to grow rapidly and is now reaching record levels in many companies. One of the challenges that SoftServe face is the preservation of corporate culture and staff development in times of remote work. For example, last year, the company hired 30% new employees who have not yet worked in the companys offices, in the traditional environment for team building, training and development, - said Mr. Kytsmey. Given the growing global competition for talent, it is necessary that Ukrainian IT education be globally competitive, and graduates of our schools choose to study in Ukrainian universities with further work in the Ukrainian IT industry. Thank you to the speakers for their interesting insights and we hope that 2021 will be a year of real development and new opportunities! Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.

View the video of the meeting

Thus, during the event, the CEOs of the EBA member companies shared their forecasts and expectations about the challenges and opportunities for doing business in the new reality.

Tomas Fiala, Dragon Capital

“Preliminary macroeconomic data indicate that Ukraine has coped well with last year’s challenges. Thus, according to our estimates, GDP fell by only 4% in 2020, which is one of the best results among European countries, only Poland fell slightly less. The situation for 2021 looks quite optimistic, provided that no new strict restrictive measures will be implemented.” Thus, Mr. Fiala added that the real GDP is projected to grow by 5.3% in 2021, while nominal GDP will grow to $ 171 billion. According to Dragon Capital’s estimates, the inflation rate in Ukraine will accelerate to 6.5% for the year period. At the same time, the level of the budget deficit will decrease to 5.2%. The exchange rate will be stable at about UAH 28/dollar at the end of the year. It should be noted that global GDP will return to pre-quarantine levels around mid-2021. Speaking about investments, the CEO of Dragon Capital noted that the company is currently in the process of closing 5 deals worth $ 200 million, also they are planning to attract more foreign investment to Ukraine. Also, Mr. Fiala admitted that it was encouraging to see that the NBU continues its course towards stable monetary and exchange rate policy and that the President takes active action in shutting down Russian propaganda channels.

Tymofiy Mylovanov, former Minister of Economic Development, Trade and Agriculture of Ukraine & freelance adviser at the Office of the President of Ukraine

“Indeed, the pandemic-induced GDP contraction was not as grave as predicted. For example, the IMF predicted a slump of almost 8% (-7.7% in April and -7.2% in October). The worst situation was in the second quarter of 2020 when GDP fell by 11.4%. In general, the negative effect was due to falling external demand and high uncertainty, which led to falling and postponed domestic (consumer and investment) demand. As a result, GDP fell by 4-5%, while restrictions on business due to lockdown caused only a 1% decrease, “said Mr. Mylovanov. He also supported the thesis that Ukraine’s economy is recovering better than expected, but in the future, the pace of recovery will depend on the speed of vaccination. The government forecasts that in 2021 Ukraine’s GDP will grow by 4.6%. At the end of 2021, inflation will exceed the target range, but it will be temporary, and in 2022 we will return to 5 +/- 1%. For this year, the state budget deficit to GDP will be planned at 5.5%. Besides, according to forecasts, in 2021 cooperation with the IMF will be continued. Negotiations are currently underway with representatives of the Fund, but the approval of the next tranche will depend on Ukraine’s implementation of its reform agreements.

Marek Tomalak, PepsiCo Ukraine

“In 2021, PepsiCo will continue to care for employees, adapt to a new reality and accelerate sustainable growth. We want to create more smiles for our consumers, suppliers, and customers by continuing to implement PepsiCo’s sustainable development program for agriculture, packaging processing, and production improvement. This will help stimulate further economic growth.”

Mr. Tomalak also added that one of the company’s main priorities is to reduce greenhouse gas emissions to zero by 2040 and accelerate the transition of plants to renewable energy sources. Overall, PepsiCo is quite optimistic about this year and hopes for a prompt global economic recovery.

Andrey Gorokhov, UMG Investments

“Last year, world prices for agricultural products and metals remained high, so Ukraine was lucky with market conditions. Much of the product was exported to China. But now we see that the authorities are beginning to impose sanctions on Chinese companies. This could lead to the loss of Ukraine’s trading partner, which we cannot allow happening, especially in conditions of uncertainty. Another risk factor is the large share of NPLs in the structure of the country’s economy, namely 42%, for which no plans of reduction have not yet been developed.” Mr. Gorokhov also added that, despite this, optimistic expectations still prevail in the company’s forecasts. Thus, 2020 has become a record year for UMG Investments in the context of expanding its investment portfolio, and goals set for 2021 are even more ambitious.

Ilia Kenigshtein, CREATIVE STATES

Today, there is an intensified trend towards deglobalization, accelerated by the pandemic. Thus, large-scale companies are losing their value, and their market share is declining, so now is the finest hour for local players. The crisis has motivated the Creative States to follow the trend towards flexibility and creativity and has proven that the “work from anywhere» model is currently in demand. In 2020, the company opened two new locations, the residents of which are not only IT companies but also banks and other representatives of the real sector of the economy. The pandemic has clearly “brought up” a new market, so the future lies behind operators of flexible office solutions such as the Creative States.

Vadim Sidoruk, DHL Express Ukraine

The postal and delivery industries were the least affected by the pandemic. At the same time, the workload on companies in this sector has increased sharply, so it was quite difficult to organize the safety of employees and, at the same time, to ensure uninterrupted supplies from Ukraine to about 200 other countries. “In order to quickly localize the disease among employees, the company has been constantly testing the staff, for which half a million euros have been spent since August. In the first half of 2020, there was a decline in B2B and transportation of medical supplies, but since July there has been a surge in B2C orders – about 10 thousand shipments. To guarantee the timeliness of deliveries, the company last year purchased additional aircraft and refitted commercial liners, “added Mr. Sidoruk.

Taras Kytsmey, SoftServe

By design, the IT industry is global, thus management and communication methods between distributed teams and remote work have improved in recent decades, and the coronavirus crisis has only accelerated innovation in the digital transformation of many industries. That’s why the IT industry has resumed all of its growth processes since the third quarter of 2020. “The number of vacancies continues to grow rapidly and is now reaching record levels in many companies. One of the challenges that SoftServe face is the preservation of corporate culture and staff development in times of remote work. For example, last year, the company hired 30% new employees who have not yet worked in the company’s offices, in the traditional environment for team building, training and development, “- said Mr. Kytsmey. Given the growing global competition for talent, it is necessary that Ukrainian IT education be globally competitive, and graduates of our schools choose to study in Ukrainian universities with further work in the Ukrainian IT industry.

Thank you to the speakers for their interesting insights and we hope that 2021 will be a year of real development and new opportunities!

Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.