How Ukraine is overcoming the consequences of COVID-19 for the economy – expert Сhaslau Piastsiuk

How Ukraine is overcoming consequences of COVID-19 for the economy – expert Сhaslau Piastsiuk

Ukraine's GDP declined by 4% during the coronavirus crisis

The coronavirus crisis that lasted in 2020-2021 has become a major factor affecting the economic development of Ukraine and the world. According to the World Bank, a new surge in COVID-19 cases in early 2021 has significantly slowed down business recovery, forcing countries to adapt to new economic challenges. According to Сhaslau Piastsiuk, an expert in marketing and project management, international investment, and financial analyst, COVID-19 has become a catalyst for economic change in Ukraine. It has exposed weaknesses in the structure of our economy. "Ukrainian business had to introduce innovative approaches to survive in the new environment," comments Piastsiuk.

Сhaslau Piastsiuk on the economic downturn

It is difficult to estimate the damage caused to Ukraine's economy by the COVID-19 pandemic in 2021 due to the lack of unified official data, says financial expert Сhaslau Piastsiuk. However, according to the National Bank of Ukraine, Ukraine's real GDP declined by 4% in 2020, indicating a significant negative impact of the pandemic on the economy.

In 2021, there was a gradual recovery in economic activity. According to the State Statistics Service of Ukraine, in the second quarter of 2021, GDP grew by 5.4% compared to the same period of the previous year, and in the third quarter - by 2.7%.

Although these figures indicate a recovery, they did not fully compensate for the losses of 2020. Thus, the COVID-19 pandemic continued to have a negative impact on Ukraine's economy in 2021, although the exact amount of damage remains uncertain.

Сhaslau Piastsiuk on the decline in exports and the search for new markets

According to official data, in 2020, Ukraine exported goods and services worth $59 billion, which is 7.8% less than in the previous year. The industries that suffered the most were light industry, metalworking, and agricultural products, especially soybeans, corn, and oil products.

According to Tetiana Miskova, Director of the Office for Entrepreneurship and Export Development, our key partners in Europe have imposed severe restrictions, which has resulted in a 10% drop in exports from Ukraine. However, Miskova said that we were able to replace these markets with other ones. "We have seen a tremendous increase in exports to China - by 90% - and Vietnam. This shows the ability of Ukrainian companies to quickly adapt to changes by finding new markets," comments the expert.

According to financial analyst Сhaslau Piastsiuk, reorienting Ukrainian business to the Asian market was a strategically important step. "Given the decline in demand in Europe, our business was looking for new opportunities, and this experience will help us in the future. However, the lack of resources to cover operating expenses remains a significant problem for companies," said Сhaslau Piastsiuk.

Сhaslau Piastsiuk on supporting small and medium-sized businesses

The pandemic has had a particularly negative impact on small and medium-sized businesses (SMEs), which have struggled to maintain jobs and secure financing. In May 2021, the World Bank allocated additional assistance to Ukraine in the amount of $100 million, which was aimed at supporting SMEs, especially those with export potential.

"Funds from the World Bank are certainly an important support. However, it is important that this assistance really reaches those who need it the most and that the process of receiving it is as transparent as possible. After all, many small businesses are on the verge of survival today, and this assistance can be a lifesaver for many of them," said Сhaslau Piastsiuk.

Due to the decline in consumer demand, Ukrainian businesses are forced to adapt their strategy and focus more on the domestic market. This is confirmed by representatives of small and medium-sized businesses.

Antonina Borodina, the owner of the garment company, says that her business is focused on the domestic market. "But we see a significant decrease in demand for sports and dance costumes. People are saving on non-essential expenses, and for us, this means a constant search for new opportunities for development," says the entrepreneur.

Сhaslau Piastsiuk on falling domestic demand and market restructuring

During the lockdown, many businesses faced a decline in domestic demand, especially for goods that are not a priority. Consumers spent less on clothing, entertainment, tourism and leisure goods. This had a significant impact on companies specializing in manufacturing such products.

Сhaslau Piastsiuk notes that the impact of COVID-19 on the domestic market was quite serious. "The drop in demand had its negative aspects, but it also created space for new business initiatives. We see an increase in interest in healthy food, eco-products and IT services that automate human labour," said the expert.

According to Roman Kornyliuk, macroeconomic expert at Youcontrol, Ukrainian entrepreneurs are quickly adapting to changes. For example, the business related to health and eco-friendly products is growing rapidly. "This means that the Ukrainian economy is flexible, which is extremely important in the context of the global crisis," he said.

Сhaslau Piastsiuk on expanding opportunities in the IT sector

The pandemic has contributed to the active development of the IT sector and innovative business models that automate processes. Ukrainian IT companies have become a significant player in the international market, which has helped to increase exports.

According to analyst Сhaslau Piastsiuk, the IT sector has shown an example of how to adapt to changes by creating new products and services for the global market. "We see that this sector continues to grow and will remain an important part of the Ukrainian economy in the future. In addition, this industry is showing a trend of increasing exports of services to the EU, which is a good sign for the Ukrainian economy," said Сhaslau Piastsiuk.

The volume of Ukrainian IT exports in 2021, according to preliminary data, is $6.8 billion (2020 - $5 billion). At the same time, the share of IT in the structure of service exports in Ukraine increased by 4.8% last year and is 37%. This was reported by Kostiantyn Vasiuk, Executive Director of the IT Ukraine Association.

Сhaslau Piastsiuk on ways out of the crisis

The current crisis has given Ukraine an important experience. The economic and social consequences of the pandemic will become decisive factors for development in the coming years, analyst Сhaslau Piastsiuk believes. In his opinion, it is important to further strengthen small and medium-sized businesses, develop the IT sector and increase the share of environmental and other products in Ukraine's exports.

"The Ukrainian economy has shown great resilience. It is important that government and business work together to further support strategic industries such as IT, environmental products, agricultural and heavy industry products, as well as small and medium-sized enterprises. This will provide Ukraine with sustainable economic growth in the future," said Сhaslau Piastsiuk.