According to the new study "2024 German-Ukrainian Business Outlook", conducted for the first time by KPMG in Germany and the German-Ukrainian Chamber of Commerce and Industry (AHK Ukraine), almost half of the 142 German companies surveyed are ready to invest in Ukraine, perceiving it as a strategic opportunity to expand their activities in new markets: 43% of German companies are planning new investments, despite the ongoing war. The main conditions for expanding activities are political and economic stability (61% and 51%, respectively), availability of state funding and guarantees (28%).

"Despite the ongoing war in Ukraine, the launch of a specialized practice with a focus on Ukraine at KPMG in Germany and the first "German-Ukrainian business review" are a positive sign of the readiness of German businesses to invest in Ukraine, says Andriy Tsymbal, managing partner of KPMG in Ukraine. — The study is important for deepening economic ties between our countries. We, at KPMG in Ukraine, recognize the importance of every effort on the way to the recovery of the Ukrainian economy and closely cooperate with our colleagues in Germany and AHK Ukraine."

Restrained optimism among German companies regarding the business climate in Ukraine

German companies express mixed assessments of the current business climate in Ukraine. According to the results of the survey, 24% of respondents rate the situation as good, the same number consider it bad. However, 42% of respondents believe that the business situation will improve over the next twelve months, only 10% expect it to worsen, and 48% do not foresee any significant changes.

"German investments can significantly contribute to the strengthening of Ukraine's economy," says Nikolai Kiskalt, partner of KPMG in Germany, head of practice in Germany for work with clients in Central and Eastern Europe. "As a large industrial country, Ukraine offers significant potential for German companies, especially in the energy, pharmaceutical, IT and outsourcing industries."

Almost half of German companies are ready to increase investments

The need for funding to support and restore Ukrainian infrastructure is enormous. According to the World Bank, spending on these goals will reach $486 billion over the next decade, requiring public and private funding.

More than four out of ten surveyed German companies (43%) plan new investments in Ukraine already in the next twelve months, which indicates their desire to participate in the recovery of the country. Only 8% of companies are considering the possibility of withdrawing investments.

Among surveyed German companies planning to establish or expand their business in Ukraine, 59% consider establishing strong ties with local companies and networks as the most important success factor. 54% emphasize the importance of access to comprehensive and reliable information about the local market, and 37% emphasize the importance of safe and convenient business trips to Ukraine.

Growth opportunities and basic requirements Almost half of German companies (48%) consider access to the Ukrainian market a significant business opportunity, and 39% of companies positively assess the availability of qualified labor. "Ukraine is one of the largest countries in Europe, has a qualified workforce, in particular, scientific and technical education here has always been at a high level. In addition, thanks to the fertile soil and advantageous logistics location, the country is an attractive place for nearshoring (eng. nearshoring - the practice of transferring business processes or production to countries that are geographically or culturally close to the country of the company's base)," explains Rainer Perau, chairman of the board of AHK Ukraine.

More than a quarter of companies (28%) emphasize the high level of digitalization in Ukraine, in particular, excellent digital infrastructure and a significant number of IT specialists as an important business opportunity.

For the majority of surveyed German companies, political (61%) and economic (51%) stability are key factors for expanding operations in Ukraine. In addition, 28% of respondents consider the availability of government financing and guarantees as another important aspect for attracting and expanding investments.