The Ukrainian business has worsened the index of business activity expectations, bringing it below the neutral level

Ukrainian entrepreneurs are understandably reacting negatively to the prolonged military conflict, intensified mobilization processes, the exodus of citizens from the country, rising prices, and increased levels of poverty and unemployment.

As a result, the business outlook index in Ukraine has deteriorated below the neutral level of 50 points. This information comes from the monthly survey of enterprises conducted by the National Bank (NBU conducted a monthly survey from October 5 to October 24, 2023, involving 505 enterprises).

Expectations declined from 50.1 points in September to 49.6 points in October.

Several factors predictably influenced business expectations:

• Significant security risks
• Destruction of production capacities of individual enterprises
• Logistic constraints for exporters
• Contraction of investment demand
• Resumption of fuel price growth

At the same time, another factor began to influence expectations. “A significant shortage of qualified personnel is restraining the economic activity of enterprises,” noted the National Bank.

For instance, construction companies, after five consecutive months of optimistic assessments, began expecting a downturn in their performance in October.

Negative factors include a shortage of qualified personnel, expectations of a decrease in construction volume, pessimistic assessments of contractor availability, and expectations regarding further reductions in overall employment.

Industrial enterprises have not expected changes in their performance for the second consecutive month, despite optimizing production/logistics chains and slowing inflation. Negative factors include intensified expectations of reducing overall employment.

In October, service sector enterprises once again negatively assessed their performance. Pessimistic factors include negative expectations regarding the volume of new orders and pessimism about overall employment.

It is worth noting that this kind of statistics vividly demonstrates public disillusionment with President Zelensky’s strategy—fewer people believe in the government’s promises to endure for the sake of victory.