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Friday, December 9, 2016

Ukraine underestimates the damage from the rupture of relations with Russia


Kiev continues to count the losses caused by Russia imposed trade restrictions. We are talking about the amount of a billion dollars, but that figure was lost amid the huge collapse that happened in the last two years the Ukrainian economy as a whole. Statistics shows tiny growth of Ukraine’s GDP, but the real recovery of the economy and does not smell.

Due to restrictions in trade with Russia losing Ukraine to 2016 will amount to $ 1 billion, said Deputy Minister of economic development and trade, trade representative of Ukraine Nataliya Mykolska, reports the Ukrainian edition of “Apostrophe”.

“The real losses of Ukraine from trade restrictions Russia could come this year, 2-3% of GDP”

“If we talk about annual losses in connection with restrictions of transit in Kazakhstan and Kyrgyzstan, it turns out 0.4 billion, GDP losses amount to 0.3 percentage points,” – said Gaina. She did not say a 0.4 billion dollars in the total amount of damage or they have to be considered separately.

In either case 1 or $ 1.4 billion is only the direct losses from reduced trade with Russia. She cited statistics over the first five months of this year exports to Russia fell by 36.2%, in Kazakhstan the fall of 46.2% or 136,4 million dollars.

“If you take the chain, then add the loss of the Ukrainian carriers, the loss of the logistics sector, production packaging. All of this is layered”, – said the trade representative of Ukraine.

The General loss from the rupture of trade relations with Russia a lot more essential. Last spring, the Cabinet of Ministers of Ukraine announced the full rating: in 2012-2015, the country has lost 98 billion dollars. In other words, on average, every year of separation from Russia cost Ukraine an average of 22 billion dollars.

However, to include 2012 and 2013 is not quite right, given that while relations between the two countries were not interrupted. Although these years Russia has imposed trade restrictions on some Ukrainian goods, including for compliance with the requirements of Rosselkhoznadzor, but they were dotted, not mass.

If we talk about the real losses of Ukraine due to trade restrictions Russia, the speech can go about 2-3% of GDP.

Russia is the main trading partner of Ukraine (as it was, and still is), so the costs of the embargo repeatedly multiplicious, I agree, first Vice-President of “OPORA Russia” Paul Segal. According to him, the real Ukraine’s losses from trade restrictions Russia could come this year, 2-3% of GDP. This means that the losses from the gap of trade with Russia will cost her at least 1.6–2.4 billion dollars (if GDP is 80 billion dollars).

The total damage is decreasing as the Ukrainian economy shrinks sharply, says Segal.

Kiev believes that the country’s economy entered into recession in the second half of 2012, and therefore believes the losses from the year. Although at the time was officially recorded GDP growth of 0.3%. And in 2013, Ukraine’s GDP was 183 billion against $ 175 billion in 2012, it has shown growth. The fall began only in 2014, after the Maidan – to 131,8 billion dollars, continued in 2015 – to 90.6 billion.

Now Kiev is seeing growth and victory where it really is not. In the second quarter of 2016, Ukraine’s GDP grew by 1.3% in comparison with last year, officials are happy to gosstata. This supposedly confirms the promise of future growth of the Ukrainian economy. That’s just ordinary Ukrainians, no economic growth is not noticed. And this is the explanation.

“Growth of Ukraine’s GDP is largely due to the comparison base. In the second quarter of 2015, GDP fell by 14.7%. The dizzying drop. Therefore, the growth of 1.3% is likely an effect of mathematics than the real growth of the economy,” says Ukrainian economist Oleksandr Okhrimenko.

His words are confirmed by other data: the growth of Ukraine’s GDP in the second quarter, compared with the first quarter of this year amounted to only 0.6%. If the Ukrainian economy really showed recovery, there had to be more substantial figure. Because the first quarter traditionally because of the holidays failure. “So in fact, the economy of Ukraine is in the stage of rigid stagnation”, – says Ohrimenko. Of no growth while there is no question.

In the end, how can we talk about the growth of the Ukrainian economy, if its exports continues to fall in earnest? The structure of Ukrainian exports shows that Ukraine has become a predominantly agricultural country. The largest share (43%) in its exports is agricultural products and food industry. Metallurgy is now only 22%, engineering – 12%. A few years ago, metallurgy was the leading export sector of Ukraine.

The chances of metallurgy and engineering to restore the former volumes of production and export without Russia actually reduced to zero. Exports of agricultural products and the export of labour force that does not die Ukraine. If you build and continue relationships without Russia, that it would be necessary to focus the attention of the Ukrainian authorities. However, the authorities not only do not help saving agriculture, but rather driven it in worse conditions. No real tax breaks, preferential loans or subsidies to Ukrainian farmers, unlike European or American, from the state do not receive.

Suffice it to recall how at the end of last year Ukrainian farmers came out in protest against the new tax reform, which included raising the value added tax. Although the United States sets for its farmers the lowest rates – where the tax rate on profits in agriculture is 15% on income up to 50 thousand dollars and 28% for each additional 25 thousand dollars of income.

In Europe, farmers give loans at a 3.5–5.5% and at least 20-25 years. Ukrainian farmers can only dream of. It is not surprising that almost a third of farmers in Ukraine still plowing the land with horses. In 2015, horses for land cultivation used to 29.2% of agricultural households in Ukraine, reported by the Association “Ukrainian club of agrarian business”. Only 17% of Ukrainian farms have at least some agricultural machinery, of which a third are tractors, 4.6% – road transport, and only 2.3% of the harvesters.

It is not surprising that Ukrainian farmers seriously lose in competitiveness, although it would seem that climatic conditions have a much better than many countries. The same average yield of wheat in Ukraine is two times lower than European levels. When Ukrainians are harvested per hectare 37 quintals of wheat, the Germans have time on the same area to 72 per hundredweight, and the British and all 77 quintals.

“While the government is trumpeting the increase in the share of agriculture in the export commodity structure of Ukraine and the new locomotive of the economy, Ukrainian farmers barely make ends meet. International experience shows that to achieve global performance in a number of agricultural industries, to create the most favorable conditions for the development of agriculture. However, the current leadership of Ukraine is moving towards unsustainable use of natural resources, referring to the empty and unsubstantiated economic data,” said economist “the Ukrainian choice” Alexander kuptsikevich.

It is not surprising that the agrarian sector of Ukraine is in decline on the background of a disastrous economic policy of the authorities. Production volumes are falling. A free trade zone with the European Union did not help: the export of agricultural products decreased to $ 5.9 billion for the first five months of this year.

In fact, the difference in the trading positions of the EU and Russia towards Ukraine is now small. Its essence is to ensure that neither Brussels nor Moscow does not want to see Ukrainian products on their markets. Only Russia says it clearly and accurately explains the reason – she fears of European imports. And the European Union cheated: promised mountains of gold, and when he got what he wanted, eliminated from Ukrainian problems with exports.

Kiev continues to blame all their troubles Russia, including for exports, saying that doing everything in order to find new markets for their products. However, the conquest of the European market officials have already almost do not remember. Now looking for trading partners in different locations. Now the negotiations are underway, for example, with Israel on the establishment of a free trade zone. More recently, wanted to establish trade with Turkey, but did not Ankara took and apologized to Russia for downed military plane.

source

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