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businesses during the war in Ukraine, with 1,261 companies from 2022 to the first quarter of 2024 inclusive. This is followed by wholesale trade, real estate operations, and construction companies. The share of closures by companies providing legal services in the total number of closed firms has increased by 100% during the war. In 2021, the legal sector accounted for 2.3% of all business suspensions, and the share of shuttered legal companies increased to 4.7% during full-scale war. However, it is noted that the intensity of companies liquidating in the water supply, wood processing, and retail and wholesale trade sectors has decreased. The rate of official liquidations of enterprises during the war compared to 2021 increased the most in the Odesa, Zaporizhzhia, and Kyiv regions. As well, a significant decrease in business closures has been observed in regions such as Kherson, Kharkiv, and Donetsk. However, this trend is related to the occupation of some regions, rather than to improving business conditions.
Depression of Ukrainian manufacturers: Investment companies note the country's shortage of investment projects. Ukrainian manufacturers do not want to attract investments because they focus on debt and cash flow, said Managing Director of Dragon Capital Mykhailo Granchak at the Grain Ukraine 2024 conference. According to him, big investors are waiting for further military actions. If there are no significant changes, the waiting period will continue. In turn, Serhii Tsivkach, the managing partner of Chicago Atlantic, called it an investment depression of Ukrainian manufacturers: "Manufacturers are afraid to make investments because of debts, military actions, and mobilization." However, the founder and managing partner of Capital Times, Serge Hancharevich, noted that Ukrainians want to invest in Ukraine despite the war. He added, though, that fewer and fewer projects remain in the eastern part of Ukraine or are being stopped due to war. According to experts, substantial risk insurance can solve these problems. For example, the German Ministry of Industry has allocated €100M to insure German enterprises’ investments in Ukraine.
A third of Ukrainian industrial enterprises predict increased costs for goods, and 25% have increased production. Every third industrial enterprise expects to raise the selling prices of their goods in the next three months. At the same time, the dynamics of the corresponding expectations decreased compared to the beginning of the year, according to the State Statistics Service's study, Expectations of industrial enterprises in May 2024. According to the assessment of leaders and managers of the industrial sector in Ukraine as a whole, production volume increased in 25% of companies and was unchanged in 50%. In another quarter of industrial enterprises, the number of orders decreased. 59% of industrial enterprises have the typical number of orders for the season, but 39% of managers estimate the number of orders to be significantly lower than usual. Also, 55% of the surveyed managers noted that it is rather difficult to predict business performance in the near future and 41% consider it a difficult task, although possible.
Where do companies with foreign investment work in Ukraine? The Unified State Register of Legal and Individual Entrepreneurs contains information on 2,903 companies with foreign capital registered in Kyiv and 800 in the Lviv region. Many companies with foreign investment are also in the Odesa, Kyiv, Dnipropetrovsk, and Kharkiv regions. 44% of these businesses work in the trade and repair of motor vehicles and motorcycles. Foreign investors are also active in processing, construction and real estate, transport, and IT, as well as professional, scientific, and technical activities. A significant
60 UKRAINE Country Report July 2024 www.intellinews.com