Business Moving Forward with Cautious Optimism — Can Investors Win the Confidence Game?

emerging europe ukraine

Read the Outlook on Ukraine special report


Anna Derevyanko

About Anna Derevyanko

Anna Derevyanko is Executive Director of the European Business Association (EBA). She is also a member of World Economic Forum Global Agenda Council and several supervisory boards. The EBA under her supervision has quadrupled its size now bringing together around 900 companies and, consequently, has become the largest union of foreign business and one of the most influential advocacy groups in Ukraine. Anna graduated from the Kyiv National Economic University with a degree in International Economics and Law.

Investors’ feelings concerning the outlook for Ukraine’s economy improved slightly in late 2016, although the economy remains fragile as the pace of reforms is still too slow.

The widely observed investment attractiveness indicator that is published by the European Business Association, rose to 2.85 points in December, from 2.57 in June 2016. The rise was driven by the National Bank’s measures to support the currency, a solid banking policy, a results-oriented approach to the International Monetary Fund’s (IMF) requirements and some macroeconomic improvements — namely in the inflation rate and GDP and FX market stability.

After years of scepticism concerning the business climate, investors must consider some more optimistic outcomes. Now, following a drastic post-Revolution of Dignity slowdown, investors are beginning to feel there is some light at the end of the tunnel.

January 2017 marked one year of the Deep and Comprehensive Free Trade Agreement (DCFTA) between Ukraine and the EU. One year on, the evolution of trade is already showing progress, particularly in the agricultural sector which is one of the traditional heavy hitters of Ukraine’s economy. 

Limited optimism and a very gradual return to market stability is great news for the end of the year, but it is not necessarily driving investors to put their money into the Ukrainian market. Ukraine offers a broad range of challenges and opportunities, as well as risk and reward. The country’s regulations can be a challenging route to navigate.

“The risk of turbulence is low, but we suggest that businesses keep their seatbelts fastened as we are now entering 2017”. This nicely sums up the prevailing mood, among the business community, early this year. 

Concerns over the insufficient pace of reforms and the lack of progress in fighting corruption are taking their toll on investor confidence, which might affect economic activity in the months ahead.

Measured on a five-grade scale, the investment attractiveness index has still not reached a positive, or even a neutral, zone. The careful optimism that was felt among investors at the end of last year was caused by the ability of the business community to adapt, rather than by tangible reforms successes. Ukraine is not yet among the big improvers for implementing reforms to business regulations, ranking 80 out of 190 in the World Bank Doing Business rating.

Nonetheless, as I have mentioned, while at this time last year there was turmoil, the feeling has picked up and the signs are encouraging.

Ukraine is making challenging steps forward, and is undergoing its most sweeping and fundamental reform movements ever. Given the magnitude of the changes, progress will come in fits and starts, but we are truly optimistic about the country’s investment potential.

To be sure, reforms are a long-term effort and a dose of patience is needed, but I am sure meaningful changes in regulations that boost the overall ease of doing business will occur. Investors are increasingly interested in the Ukrainian market but it will take time for this optimism to translate into FDI, especially when businesspeople have been so cautious for so long.

Ukraine has a unique opportunity to attract strategic and job-creating investments. The time for action is now.


The views expressed in this opinion editorial are the author’s own and do not necessarily reflect Emerging Europe’s editorial policy.


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