Ukrainian Businesses Expect Growth For The First Time Since War Began

Businesses in Ukraine are expecting growth for the first time since Russia launched its unprovoked, full-scale invasion in February of last year.

The Monthly Business Activity Expectations Index (BAEI) went up to 51.5 in April from 49.5 in March. The increase and the BAEI surpassing the neutral 50 points indicate expectations for production growth, according to a May 1 report published by the National Bank of Ukraine (NBU).

The report also noted that in the trading industry, businesses are expecting higher trade turnover and purchases of goods for sale. Industrial enterprises are expecting lower production costs, improvements in energy supply and stabilization of fuel prices.

Of all the country's industries, the NBU said businesses in the construction industry provided the "most reserved assessments," adding that they are expecting a decline in construction volumes as well as the number of new orders. That being said, construction companies are expecting to see growth in their purchases of subcontractors' services.

Despite expectations of positive growth, the majority of companies surveyed by the NBU said they are expecting to see increasing operational costs and tariffs.

The NBU conducted the survey from April 4 to 21. A total of 481 companies participated in the survey, among which 46.6% are in the industrial sector, 28.7% in the service industry, 20.8% were retailers and 4% were construction companies.

Russia launched its war in Ukraine on February 2022. Since then, 90% of businesses suffered due to a decrease in demand and purchasing power. Additionally, 71% of businesses said they suffered from disruptions in supply chains due to the war. Agricultural production costs also increased significantly since the start of the conflict, going up by 64% in livestock costs and 72% in crop production costs, per a March report from the International Rescue Committee (IRC).

The reports come as Ukraine's military prepares for a much-anticipated counteroffensive and continues to defend the embattled city of Bakhmut in Donetsk Oblast. As of Saturday, the Armed Forces of Ukraine has continued to successfully push back Russian troops through a series of counterattacks.