The second quarter of 2020 will definitely be the worst for the Ukrainian economy over the last five years. But the economy Ministry said that while all the bounds of predictions — the drop in the economy of Ukraine in January-April 2020 there is estimated at 5%. One thing is for sure — the peak of fall we have already passed.
A view from the West
For example, an affiliate with the Financial Times, a British specialized magazine The Banker in the article about the Ukrainian economy is set up quite optimistic.
“As of now the base scenario is a recession in 2020, with the further recovery of the economy in 2021. Although it all depends on how will the epidemic”, — quotes the edition of MATEO Patrone, managing Director of the European Bank for reconstruction and development in Eastern Europe and the Caucasus.
Although, last year Ukraine lost a few positions in the world ranking of corruption perception and moved to 126 out of 180.
The Banker recalls that in may 2020, the international monetary Fund took the decision to switch to 18-month standby program for the financing of Ukraine, which provides more leeway for the government in responding to the challenges of the epidemic.
“In the short term the focus should be on ensuring social standards of life and the preservation of jobs. However, efforts should be made to not lose the new economic opportunities offered by the crisis to create a favorable investment climate in the medium term,” says MATEO Cartridge.
The indicator of confidence of international investors in Ukraine, said The Banker, was the theme of PrivatBank. After the nationalization and recapitalization, the Bank is showing very good financial results. In 2019, the Bank declared 32.6 billion hryvnia net profit. For comparison, profit of Raiffeisen Bank Aval, which won second place in the same year amounted to 4.7 billion UAH.
“The fate of PrivatBank is a kind of a bull in a China shop. For us it is extremely important not only for the allocation of Ukraine of the IMF loan. The fate of PrivatBank will determine the credibility of the country as a whole and form its investment climate,” notes Chuck.
Side effects of the quarantine
Because of the shutdown of some sectors of the economy in April and may calm down the situation on the currency market of Ukraine, demand for foreign currency on the market. After the March collapse from 25 to 28 per dollar, the hryvnia has strengthened and stabilized at the level of 27 for one evergreen. Financial experts call this level of guidance in the coming weeks.
The world will collapse stronger
But for Ukraine this is a problem because the share of exports in our GDP is around 45%.
According to estimates, the ECB, the European economy will start to recover only in 2021. Eurozone GDP in 2020 could be reduced by 5-12%. While the EU is a key trade partner of Ukraine and source of remittances from migrant workers (Ukrainian migrant workers — approx. ed.).