Economic review in June 2024. What prevents Ukrainian businesses from raising funds?

Since March 2022, the Centre for Economic Strategy (CES), together with the German Economic Team (GET), has been preparing monthly reviews of Ukraine’s economy during a full-scale war.  All notes can be found under the link.

Executive summary:

• Special topic: Despite the large number of options for attracting funds from banks, financial institutions, the government, and international partners, it is not always easy for Ukrainian businesses to borrow money. We examine the main problems and give recommendations to all categories of market participants.
• Macroeconomic trends: Real GDP in the first quarter of 2024 increased by 6.5% y-o-y; the economic recovery will slow down in the next quarters of the year. Business expectations fell in June due to the deteriorating security situation, significant power outages, and rising production costs.
• Sectoral analysis: Ukraine doubles electricity imports for the second month in a row as the electricity crisis worsens. Steel production remains at local highs on higher iron ore exports. Agri exports at 70 mln t – 2023/2024 marketing year results.
  Monetary, FX, and Banking sector: Inflation accelerates– 3.3%, and key rate policy remains stable – 13%. Hryvnia continues to devaluate, setting a record – 40.8 UAH/$; the international reserves decreased but remain sufficient; lending continues to grow moderately, including non-subsidised loans.
• Fiscal sector: Ukraine received $2 bn of foreign budget assistance in June. Tax revenues have shown a strong growth y-o-y in the first half of 2024 but have been stagnating since April. State budget expenses in May increased by 29% to UAH 390 bn, with defence spending growth of 34% m-o-m, to UAH 206 bn.

The recording of discussion:

Participants:

• Andriy Gapon, Director of the Entrepreneurship Development Fund;
• Viktoriia Kulykova, Head of Committees at the European Business Association;
• Kateryna Rozhkova, First Deputy Governor of the National Bank of Ukraine.
• Andriy Strashnyi, Head of the Financial Policy Department, Ministry of Economy of Ukraine;
• Artem Shevalev, Member of the Board of Directors of the European Bank for Reconstruction and Development;
• Boris Shestopalov, Сo-founder of HD-GROUP.