The World Bank has conducted an assessment of the business landscape in Ukraine amidst the backdrop of an ongoing war, revealing some noteworthy trends. While the conflict has undeniably taken its toll on enterprises, a majority of them have strived to retain their workforce rather than resorting to mass layoffs. According to a study conducted by the World Bank Regional Director for Eastern Europe, Arup Banerjee, a mere 3% of Ukrainian companies have shut down since February of the previous year, while an overwhelming 97% have persevered and remained operational. This statistic is quite remarkable, considering the devastating nature of the war. Furthermore, of the companies that are still functioning, a significant 80%—or four out of five enterprises—are either fully open or partially operational.
Banerjee expressed his astonishment at the resilience exhibited by the Ukrainian business community in the face of adversity. He highlighted the fact that numerous firms have experienced a decrease in capacity but have managed to continue their operations nonetheless. It is worth noting, however, that the impact of the war has varied across sectors, with sales and employment being affected differently based on industry and geographic location. On average, sales have plummeted by approximately half, with a staggering 53% decline, while employment has dropped by 26%.
The repercussions of the war have been most acutely felt by large companies employing over 100 individuals. These entities have suffered the greatest setbacks, with 41% of them reporting losses in assets. In stark contrast, only 15% of small businesses, characterized by a workforce of fewer than 19 employees, have experienced a similar fate.
Geographically speaking, the eastern and southern regions of Ukraine have been hit the hardest in terms of sales, with respective declines of 70% and 63%. In contrast, the western part of the country has witnessed a comparatively milder decrease in sales, amounting to 39%. Banerjee postulates that the relatively greater resilience exhibited by medium-sized and small enterprises can be attributed to their ability to adapt and respond flexibly to the challenges imposed by the war.
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In a separate study conducted by the Center for Innovation Development, an examination of the state and requirements of small and medium-sized businesses in Ukraine was undertaken. Researchers collected and analyzed data from 15 regional military administrations and 125 territorial communities. Unfortunately, the results of this study indicated that the Ukrainian business landscape has traditionally been characterized by a lack of external support and guidance. More details regarding this issue can be found in the article titled “Business in the regions: An Optimistic Outlook Amidst Information Deficiency.”
