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USAID/Ukraine Analytical Services in Support of the Economic Resilience Activity (ERA AS)

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USAID/Ukraine Analytical Services in Support of the Economic Resilience Activity (ERA AS) USAID/Ukraine Analytical Services in Support of the Economic Resilience Activity (ERA_AS) Household and Business Economic Resilience Study of Government- Controlled Areas of Donetsk and Luhansk Oblasts and Sea of Azov Region in Eastern Ukraine: 2020–2021 Study Report February 12, 2021 1 This report was prepared for the United States Agency for International Development (USAID) by SSG Advisors, LLC (d/b/a Resonance) This publication was produced for review by the United States Agency for International Development Ukraine Mission (USAID/Ukraine) by SSG Advisors, LLC (d/b/a Resonance), through Contract No. AID-72014118C00005 Principal USAID Contact: Larissa Piskunova, Contracting Officer’s Representative, [email protected] Principal Author: Jane Shearer, Senior Technical Advisor, SSG Advisors, LLC (d/b/a Resonance) Implemented By: SSG Advisors, LLC (d/b/a Resonance) 2000 P Street NW, Suite 410 Washington, DC 20036 Tel.: 202-548-7107 1 Mill Street, Suite 200 Burlington, VT 05401 USA Tel.: 802-735-1169 ERA_AS 2020–2021 Economic Resilience Study in Eastern Ukraine, February 2021 USAID/Ukraine Analytical Services in Support of the Economic Resilience Activity (ERA_AS) Household and Business Economic Resilience Study of Government-Controlled Areas of Donetsk and Luhansk Oblasts and Sea of Azov Region in Eastern Ukraine: 2020–2021 Study Report February 12, 2021 DISCLAIMER: The authors’ views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government. CONTENTS Acronyms and Abbreviations ........................................................................................................... ii Executive Summary ............................................................................................................................ 1 Section 1: Background ....................................................................................................................... 5 Purpose .............................................................................................................................................................. 5 Methodology .................................................................................................................................................... 5 Data Limitations and Challenges Encountered ........................................................................................ 6 Section 2: Key Findings from GCA Donetsk and GCA Luhansk ............................................. 7 Unemployment Rate ...................................................................................................................................... 7 Access to Economic Opportunities for Individuals Index ..................................................................... 8 Access to Economic Opportunities for Businesses Index .................................................................. 10 Economic Resilience Index ......................................................................................................................... 11 Rates of Confidence in the Future Economy ......................................................................................... 14 Economic Confidence by Business Respondents .................................................................................. 16 Section 3: Key Findings from Sea of Azov Region ..................................................................... 18 Unemployment Rate .................................................................................................................................... 18 Access to Economic Opportunities for Individuals Index ................................................................... 19 Access to Economic Opportunities for Businesses Index .................................................................. 19 Rates of Confidence in the Future Economy ......................................................................................... 20 Section 4: Conclusions .................................................................................................................... 22 GCA Donetsk and GCA Luhansk ............................................................................................................. 22 Sea of Azov Region ....................................................................................................................................... 23 ANNEX 1: ERA_AS Context Indicator Summary Table ......................................................... 25 ANNEX 2: Characteristics of Survey Respondents .................................................................. 30 ANNEX 3: SSSU Context Indicator Computations ................................................................. 31 ANNEX 4: Economic Resilience Index Computations ............................................................ 34 ANNEX 5: Data Collection Locations ......................................................................................... 40 ANNEX 6: Study Instruments ....................................................................................................... 46 Household Survey Questionnaire ............................................................................................................. 46 Business Survey Questionnaire.................................................................................................................. 65 ERA_AS 2020-2021 Economic Resilience Study in Eastern Ukraine, February 2021 | Page i ACRONYMS AND ABBREVIATIONS ATO Anti-Terrorist Operation CAGR Compounded Annual Growth Rate COVID-19 Novel Coronavirus Disease 2019 CPI Consumer Price Index ERA Economic Resilience Activity ERA_AS Analytical Services in Support of the Economic Resilience Activity ERI Economic Resilience Index GCA Government-Controlled Area GCA-D Government-Controlled Area of Donetsk Oblast GCA-L Government-Controlled Area of Luhansk Oblast GDP Gross Domestic Product GRP Gross Regional Product IDP Internally Displaced Person KIIS Kyiv International Institute of Sociology PWD Person with Disabilities SoA Sea of Azov Region SSSU State Statistics Service of Ukraine UAH Ukrainian Hryvnia USD U.S. Dollar USAID United States Agency for International Development ERA_AS 2020-2021 Economic Resilience Study in Eastern Ukraine, February 2021 | Page ii EXECUTIVE SUMMARY The Analytical Services in Support of the Economic Resilience Activity (ERA_AS) was awarded to SSG Advisors (d/b/a Resonance) in August 2018. A five-year contract, ERA_AS supports USAID/Ukraine through monitoring, evaluation, learning, and adaptive management efforts with respect to the Economic Resilience Activity (ERA), concurrently awarded to DAI Global LLC in August 2018. ERA is a six-year USAID activity that aims to improve the economic resilience of eastern Ukraine by providing assistance to stabilize the economy, support sustainable development of small and medium-sized enterprises, and build confidence in the future of the regional economy. As one of its core tasks, the ERA_AS team provides annual population-level analysis of economic trends by collecting information through household and business surveys and key informant interviews conducted across government-controlled areas of Donetsk (GCA-D) and Luhansk (GCA-L) oblasts and targeted areas in the Sea of Azov region. Findings from the annual study provide USAID/Ukraine and key stakeholders with key economic data to facilitate deeper understanding of the operating context. Based on analysis of 2020 data, economic metrics of unemployment and satisfaction with market systems have remained stable or even improved from last year despite the effects of the COVID-19 pandemic. Although economic resilience in GCA-L rose slightly, it fell in GCA-D, mostly at the regional level. Most notably across the study, confidence in the future economy has dramatically declined, fueled by economic disruptions and uncertainty caused by the pandemic. Specific conclusions include the following: • Widespread economic impact from COVID-19 is not evident in current macro-level metrics but is likely to manifest across all economies in the coming year and beyond. • Rates of confidence in the future economy among both individuals and businesses plummeted across all study regions, and more respondents believe that the future economy will worsen over the next two years than those who believe it will improve. • Both individual and business respondents who are confident in the future economy are most likely to cite positive changes in the local economy, including the number and types of jobs available and increased opportunities for self-employment or business expansion. • Labor force and business satisfaction with access to education and skills improvement services has improved across all study regions, especially in GCA-L. Conversely, satisfaction with hard infrastructure and public services continues to be low. • Economic challenges related to the conflict in eastern Ukraine continue to have less of an impact on economic opportunity than in past years across all study regions, especially in GCA-D and GCA-L. • Market systems in GCA-L show signs of strengthening at several levels, including improved access to education and skills training, a more qualified workforce, a more diversified economy, better public service support, and improvements in hard infrastructure. • Although unemployment rates across the Sea of Azov region have declined slightly, unemployment in Melitopol remains
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