Page 46 - Ukraine OUTLOOK 2024

salaries of military personnel, but the situation will change next year. The budget incorporates a 16% y/y reduction in salary payments to the defence sector in 2024, implying an even deeper decline in real terms.
However, this decline is likely to be fully compensated with an increase in salaries in the private sector.
The real average salary was little changed in 1H23 vs. 1H22, but it rose substantially in 2H23 due to a rapid slowdown in inflation.
In 2024, businesses will be forced to raise salaries due to a tight labour market and high competition for employees. A gradual reduction in unemployment will also increase total disposable income.
A supporting factor is a scheduled 19% gain in minimum salary over 1Q24 as per the new budget.
Despite the war, Ukrainian retailers doubled the number of stores in their networks. As of the end of October 2023 17,692 stores in the main retail sectors (including the entertainment sector) were operating in Ukraine, which is 1.9% more than in 2021. In ten months of 2023 1,975 trade facilities started or resumed operation.
Compared to the pre-war indicators, the number of stores in operation by mid-autumn of 2023 showed positive dynamics, amounting to 101.9%. In addition, during the 20 months of full-scale war, the number of open and working shops grew by almost 31%, erasing the 29% decline in March 2022.
The largest number of operating stores is concentrated in Kyiv and the surrounding region, as well as in the Lviv and Dnipropetrovsk regions. These three regions account for 44% of all working stores of the surveyed retailers. The best dynamics of development were demonstrated by pharmacy chains, which increased their number of operating points by 16% compared to the figures for 2021.
Turnover at Ukrainian shopping malls increased in 2023, and foot traffic has exceeded pre-war indicators. The largest Ukrainian shopping and entertainment centres noted a significant rise in turnover in hryvnia, by 40%-100% compared to last year, and foot traffic, which has exceeded pre-war indicators, said the top managers of shopping centres at the RAU Summit 2023 in Kyiv.
In the capital's Respublika Park, the number of shoppers in October exceeded the pre-war December 2021 figure with 1.57mn people, against 1.54mn. Turnover in hryvnia compared to December 2021 rose by 41%, and in dollars by 5%.
International brewing company Carlsberg will invest an additional $100mn into new production facilities in Ukraine despite the risks from the ongoing war with Russia, UBN reported on November 23.
International companies are drifting back into Ukraine as the economy stabilises and incomes start to rise again. Part of the long-term strategy of most FMCGs (fast moving consumer goods) companies is to move into risky emerging markets as early as they can to capture as much market share as possible before the market becomes developed and competitive.
The Swedish clothing chain H&M has also resumed operations in Ukraine, opening two stores in Kyiv on November 9, in the Lavina Mall and Respublika Park, the retailer's press service told Interfax-Ukraine. The Swedish company Hennes & Mauritz AB (H&M), owner of Europe's second largest chain of
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