New economic distortion: Why wages grow in Ukraine?

Author : Viktor Pynzenyk

Source : 112 Ukraine

Real wages of the Ukrainians increased by 17.3% in the last ten month
11:50, 14 November 2017

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Another controversy of the current economic situation in Ukraine deserves your attention. With the growth of the economy at about 2%, wages increased by 37.2% (September 2016 to September 2017). There is a serious disproportion, which our economy is just unable to fill. And therefore a significant part of the "filling" of incomes was taken up by prices. After ten months, inflation exceeds even the already adjusted annual forecast - 11.5% (until December 2016).

Related: Inflation, unemployment, and deep crisis of Ukrainian economy

And the prices did not save the whole "shot." We see one more glitch. Real wages in Ukraine increased by 17.3% (over the same period). How is this possible with a two percent growth in the economy?

Perhaps, our income fill the imported goods. They are bought for dollars and on the domestic market, they are sold for hryvnia. And this has begun to revive the unhealthy problem of the last decade.

Related: For the first time Ukraine is experiencing such a devastating crisis

For the last three years (2014-2016), Ukraine has been experiencing a positive balance of foreign trade. Exports of goods and services exceeded imports.

For eight months of this year, the commodity part (without services) is reduced to a deficit of 3.3 billion dollars against 1.4 billion for the corresponding period last year. 11% of imports are not covered by export earnings.

After three years of positive dynamics, when the external debt decreased by 29 billion dollars, it began to grow again (by 2 billion for half a year).

Related: Paradoxes of Ukrainian economy's growth

In fact, you can only consume what is produced. You can try to get around this economic axiom. And it can work for some short time. But in the end, you would pay for everything. Therefore, I draw attention to these alarming bells, which require an adequate response. No matter how "pleasant" social decisions are perceived by the "stomachs" of the Ukrainians.

Related: Economic trends for Ukraine in 2018, - Business Ukraine

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