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Tuesday, March 20, 2018

The economy of Ukraine more no hope

Exactly three years ago in Ukraine there was a coup, one consequence of which was the rapid degradation of the country’s economy. From this point of view the main result of euromaidan is the final consolidation of Ukraine in the global economic periphery in the company of a backward African countries. And roll on this track was surprisingly easy.

You need to understand that the new government of Ukraine with his own hands did everything to the country at an accelerated pace is among the peripheral economies. And, it seems, had not given much thought about what to get off this trajectory is almost unreal.

Country of the global South

“Close to the level of GDP per capita are countries such as Uzbekistan, Republic of the Congo, Djibouti, Laos – in a word, those who are usually attributed to the global periphery or “the global South”

For Ukraine’s economy the dream of European integration turned into a movement in the opposite direction. According to the world Bank, in 2014 the country’s GDP in absolute terms, fell by 28.1%, in 2015 the fall amounted to 31.3 per centaccording to the results of the Ukrainian GDP reached 90.6 billion, which is comparable to the 2005 level. For comparison, in the crisis year of 2009 Ukraine’s GDP fell by almost 35%, but the economy quickly “bottomed” by 2013, reaching a record for the post-Soviet period mark – 183,3 billion.

Now the economic recovery, at least to this level looks like it is very distant future. In the past year, according to a recent Ministry of economic development of Ukraine, GDP grew by about 2%, but it just means that the economy felt the proverbial “bottom of the crisis”, which can be arbitrarily long. The vast majority of the population growth in such a small scale simply does not feel, and incentives for rapid recovery growth the country has no. The more that per capita GDP continued to fall: from the level of 3969 dollars in 2013, it dropped to a level of 2052 dollar at the end of last year, which again returns to Ukraine for more than a decade ago. At the global scale, a similar level of GDP per capita are countries such as Uzbekistan, Republic of the Congo, Djibouti, Laos – in a word, those who are usually attributed to the global periphery or “the global South”.

The poverty of the countries of the global periphery is a direct consequence of the specific structure of their economy, dominated by production of primary raw materials. On this way Ukraine’s economy has steadily moved in the last three years, as illustrated by data on exports, given by the state statistics service. From 2013 to 2016, the total fell by more than half, from 77 to 32.7 billion dollars, but some commodity items, the decline was not too significant. For example, the export volume of crop production in 2013-2016 year declined from 8.9 to 7.1 billion dollars (including grain from 6.4 to 5.4 billion dollars), and exports of fats and oils remained at the same level – $ 3.5 billion per year. Given the three-fold devaluation of the hryvnia, this means that Ukrainian producers had to dramatically increase exports.

The industry’s exports fell much faster. The volume of export of mineral products (coal, salt, ore, fuel) for the last three years has decreased from 7.5 to 1.7 billion dollars, of chemical industry products – from 4.3 to 1.4 billion dollars, of ferrous metals – from 17.6 to 7.6 billion dollars, and products – from 2.6 to 0.6 billion dollars. In mechanical engineering in the period, the exports fell 2.7 times, from 10.3 to 3.8 billion dollars, and in 2013 it accounted for 16.3 per cent of total Ukrainian exports, now only 11.6 percent. At the same time, the share of crop exports increased from 14% to 21%, the share of fats and oils – from 5.5 to 10.8%. In total, according to the Ukrainian National scientific center “Institute of agrarian economy”, on agriculture last year accounted for 42% of the exported goods.

In short, the international division of labour in the three years after euromaidan Ukraine is confidently entrenched in the group of countries specializing in agricultural products, predominantly the simplest.

It is worth noting that all official macroeconomic statistics of Ukraine the last two or three years, invariably accompanied by the word “excluding the temporarily occupied territory of the Autonomous Republic of Crimea, city of Sevastopol and part of the zone of the antiterrorist operation”. But even if not to take into account the industrial enterprises of Donbass, which is now the territory of the DNI and LC or destroyed during the war have to admit that the new government actually condoned the accelerated de-industrialization of the country.

The number of closed, stopped, or a moribund industrial enterprises of Ukraine outside of the Crimea and the “zone ATO” already amounts to several tens. The first number in the list – aircraft building concern “Antonov”, which was liquidated in the beginning of last year. Officially, it was filed as an attachment its enterprises of concern “Ukroboronprom”, but in 2015, “Antonov” has collected a total of two aircraft, and last yearnone, and due to the lack of Russian components. At the same time, the output of the automotive industry, according to the national Association of automobile manufacturers, in the past year fell by 36.5%just something to 5264 units, which in itself is negligible for a country with a population of about 40 million people. The main loss in this segment – Zaporizhia automobile plant that ceased operation early last year. In critical condition due to the rupture of relations with Russia turned out to be engine-holding “Motor Sich” and the Dnepropetrovsk missile concern “Pivdenmash” where once began a career of Leonid Kuchma.

Yes, at the end of last year the industry was marked by some recovery in growth was 2.4%. But again, this does not compensate for the terrible failures of 2014 and 2015, when the index of industrial production fell respectively by 10.7 and 13.4%. The loss of the Russian market for Ukrainian industry was not sufficiently compensated by the access to markets of other countries (primarily the EU), and count on the fact that the Ukrainian industry will come alive due to the inflow of foreign investment, is clearly not necessary. The latest version of the rating of investment attractiveness of the world economic forum published in September last year, Ukraine took the 85th place, next to Namibia. But the international credit rating Agency S&P last year, the country was near the Ghana and Iraq.

Due to the falling incomes of the Ukrainian industry does not have high hopes on domestic demand.

The extent of degradation of the “national economy” of Ukraine are even clearer, if we remember that after the collapse of the Soviet Union, the country has received perhaps the most balanced economy of all the former Soviet States. Without exaggeration, brilliant opportunities for the development of agriculture, a dense network of industrial enterprises (especially in the East and centre of the country), several large export ports, rich resources for the development of resorts and tourism, a highly educated population – all of these initial data allowed Ukraine to become one of the most important economies in Europe. As a result, the level of GDP per capita in Ukraine is lower than even the poorest European countries – Bosnia and Herzegovina, Albania and Macedonia, while it is slightly ahead of Moldova.

Land less population

Repression and terror on Ucraineana of the main problems of the world economic periphery is that they usually have a fairly large population, the excess for the peripheral-type economy. Therefore, the peripheral countries are an active supplier of labour migrants to more developed countries, and most of allwith reset received at home competencies: Nigerian or Bangladeshi with higher education hardly shines a graduate job in London or new York.

Judging by the demographic picture of Ukraine, she stood for a long time this way, and euromaidan has created preconditions for reducing the population of the country has accelerated sharply.

On December 1, 2013, according to official statistics, Ukraine’s population was of 45.44 million, including an estimated 2.36 million people of Crimea. After the reunification of the Crimea with Russia Ukrainian statistics ceased to consider the population of the Peninsula, but continues to include in their reports the population of DND and LNR, which, of course, creates rich opportunities for manipulation. But even with this calculation is that over the past three years Ukraine’s population has declined by at least half a million people. Officially recognized by the amount of “cash” population on the 1st of December last year, 42.6 million people (without Crimea and Sevastopol), the number of permanent population is still less 42,43 million people.

As debts rose Ukrainyi same time, according to the Main statistical office of the DNI on may 1 last year, on the territory of the Republic lived 2.32 million people, and in LC on June 1, 2016 – 1.5 million people, for a total of 3.82 million residents. It is clear that these data are far from perfect, but they at least allow us to estimate which part of the population of Ukraine actually lost after euromaidan. Moreover, in addition to the number it should take into consideration the quality of the population, many of whom were employed in industrial production.

It is also worth noting that Yulia Tymoshenko has said about a million of Ukrainians who moved to the EU for the last three years.

But even if we leave aside the inevitably speculative estimates of the population of Ukraine after 2014, the inescapable fact remains that it is regularly a natural decline. For 11 months of last year, the number of deaths exceeded the number of births per 164,3 thousand people in 2015, the figure was 183 thousand, in 2014 166,8 thousand, in 2013 – space of 158.7 thousand. The last time Ukraine’s population showed an increase in 1993, when it amounted to 51.87 million. This is perhaps the main difference between Ukraine and most of its companions on the global peripheral “club” – the Ukrainian authorities have to deal with the demographic boom, characteristic for countries of Asia and Africa: the population itself is dying or leaving the country.

If we impose the long-term demographic processes have changed dramatically over the last three years the structure of the economy, we can easily assume that the most fundamental issue for the economy of Ukraine at the present time is the division of land – the main liquid assets of the country. 15 years before euromaidan, the rural population of Ukraine decreased from 16.1 to 14.1 million, and last year was estimated at 13.2 million people (without Crimea and Sevastopol). This nonstop process only plays into the hands of large agricultural holdings, especially transnational, because they have achieved technological level allows you to organize virtually unmanned production. The excess rural population in such circumstances is unnecessary ballast, which reduces profitability.

The only question that need to be addressed to landowners is the removal of the moratorium on the privatization of Ukrainian farmland, set in the era of Leonid Kuchma until January 1, 2017. In October last year, Parliament extended the moratorium, but that certainly hasn’t stopped the lobbyists of repeal, including the President himself Petro Poroshenko – February 17 a group of deputies of the Verkhovna Rada has sent a petition to the constitutional court. Here you need to understand that the abolition of the moratorium is one of the key demands from the IMF in exchange for new measures to support the Ukrainian economy. The result of the previous measures this friendly help very clear: if in 2009-2013, the ratio of Ukrainian sovereign debt to GDP was kept in a fairly comfortable range of 34-41%, while last year this figure has already reached 92.7 per cent.

In this aftermath of the euromaidan “institutional reforms” held in full compliance with the requirements of international creditors, once again confirmed the long known fact that virtually all of the costs for absolyutizirovat neoliberal economists “to improve the institutions” carries the country’s population. In this sense, the most obvious galloping rise in utility tariffs, brought many Ukrainians to choose – not to pay for utility services or to refuse from the priority of living expenses. This is evidenced by the fact that last year the volume of public debt has more than doubledfrom 10.9 to 23.4 billion. This should also add double-digit inflation is 24.9% in 2014, with 43.3 per cent in 2015 and 11.4% in the past – and the above-mentioned three-fold devaluation of the hryvnia to the dollar. According to the Institute of demography and social studies of National Academy of Sciences of Ukraine, made last fall, just one year the proportion of Ukrainians actually living in poverty increased from 28.6 to 58.3%further evidence that the main result of euromaidan has been the rapid entry of Ukraine among the poorest countries in the world.


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