The index of investment attractiveness of Ukraine showed the lowest value since 2013

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The index of investment attractiveness of Ukraine was 2.17 points out of 5 possible

A full-scale war has become a new factor influencing the level of business activity and the investment environment in Ukraine.

Thus, the integral indicator of the Investment Attractiveness Index of Ukraine in the first half of 2022 fell by half a point and amounted to 2.17 points out of 5 possible. This value is the lowest since 2013.

These are the results of a new wave of expert research conducted by the European Business Association.

Recall that half a year ago the index was 2.73 points. For comparison, during the active phase of the Covid-19 pandemic, the Index dropped to 2.4 points, and during the Euromaidan – to 1.8 points, which is still the lowest value for the entire period of the study. It is worth noting that immediately after the Revolution of Dignity, the Index showed a significant jump and further growth, so we hope for a similar trend after the end of the war.

The general directors' assessment of the investment environment in Ukraine has deteriorated . The percentage of SEA that considers it extremely unfavorable has grown tenfold, from 5% to 53% in the last six months. Another 34% consider it rather unfavorable. 9% of directors assess the current investment climate as neutral and another 4% consider it favorable. The largest number of positive assessments of the business environment of this wave was received from representatives of the legal and consulting business, as well as FMCG enterprises.

The evaluation of the semi-annual dynamics of the investment climate has also significantly worsened . Negative dynamics is observed by 79% of investors, another 17% believe that the business climate has not changed significantly. Somewhat better forecasts for the next six months. Only 38% expect the situation to worsen further, while 36% believe that the investment climate is not undergoing significant changes, and 26% predict it will improve before the end of the year.

Despite the war, 91% of the Association's companies plan to continue working in the Ukrainian market, and 55% are going to invest in Ukraine even in wartime. In particular, CEOs talk about investment plans in the agricultural sector, energy, IT and telecom, construction, pharmaceuticals, FMCG, real estate, and more. In addition, 12% believe that it will be profitable for new investors to enter Ukraine this year, although the remaining 57% of respondents do not agree with this.

Russia's military aggression against Ukraine, as expected, topped the list of factors that had a negative impact on the investment climate, followed by corruption in second place, and a weak judicial system in third place. At the same time, the negative impact of Covid-19 on the CEO was assessed as minimal and put in last place on this list. Among the positive changes, business leaders most appreciated granting Ukraine the status of an EU candidate, the abolition of duties and quotas on Ukrainian exports, and “transport visa-free” with the EU.

Although the worsening of business climate assessments this year was expected, the question remained how much the war had hit investors' moods and plans. From the results obtained, we see that the state of the investment climate turned out to be thrown back to 2012-2013, even before the start of any hostilities. And this is a pretty good result, in my opinion, given that a full-scale war is going on in the country. This testifies both to the stability of Ukrainian business and the courage of our people, as well as to the fact that the reforms and positive changes of the last eight years have given us a certain margin of safety,” commented Anna Derevyanko, Executive Director of the European Business Association, on the results of the study.

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