Since the start of the full-scale Russian invasion, the revenue of companies operating in Ukraine has fallen by half on average across the country.
Source. This is stated in a recent study by the World Bank on the impact of the war on Ukrainian business, DW reports.
It is noted that business has been affected differently in different regions of Ukraine: in the east and south of the country, where the fighting is ongoing, revenue has decreased by three times and 60%, respectively, and the number of employees in companies from these regions has decreased by almost 40%. Companies in the west of the country saw their respective figures drop by 40% (revenue) and 20% (number of employees) compared to 2021.
At the same time, only less than a third of companies in the eastern and southern regions, where more than half of the country's industrial production is located, managed to maintain production at the level before the invasion.
In the east of the country, almost half (47%) of the companies faced destruction due to Russian attacks, in the south – about a third (29%), and on average, every fifth company in the country.
The report identifies metallurgy as the most affected industry in Ukraine, which accounted for 20% of exports and 10% of GDP before the war.
In particular, Ukraine has lost large metallurgical production facilities in Mariupol – Azovstal and Ilyich Iron and Steel Works – and many other enterprises in the occupied territories. As a result, steel production fell by more than 60% in 2022.
The main challenges faced by Ukrainian businesses in the spring and summer of 2023, when the survey was conducted, were difficulties with energy supply (reported by 15% of respondents), internet connectivity (about 10%), logistics disruptions, and a shortage of employees due to mobilization and migration. 15% of companies had to reduce production and cancel orders due to staff shortages, and more than 20% of large enterprises had to do so.
In addition to all the problems that limit production, Ukrainian businesses have faced a huge drop in demand, according to the World Bank's analysis of data. This was the main reason why many companies had to temporarily suspend operations or close down altogether.
This also affects the ability of companies to invest, which is hampered by uncertainty about when demand will recover. On average, investments in development decreased by 76%.
More than half of the companies are experiencing difficulties in financing their current operations – every second company said that it may not be able to service its liabilities over the next six months.
Background. Meanwhile, it was reported that Zaporizhstal increased its rolled steel output by 57% last year and steel production by 65%. In 2023, the plant operated at an average of 70% of its capacity.