What's the situation with Ukrainian economy?

Author : Oleksandr Okhrimenko

Source :

According to official data, Ukraine's industrial production amount in January-May 2017 fell by 1.3%, while construction output grew by 20%
20:36, 3 July 2017

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112 Agency

Five months is probably not a long period for the world economy, but everything is changing so rapidly in Ukraine that even a month can bring a lot of events. We do not know how to live calmly. We need a drive.

Very smart economists-theorists would say that the results of the work of the Ukrainian economy for the first five months of this year turned out to be diverse. Indeed, our economy operates in interesting way.

According to official data, Ukraine's industrial production amount in January-May 2017 fell by 1.3%, while construction output grew by 20%. This cannot be true, American economists-theorists will say. But in Ukraine everything can happen. In many respects, the growth of construction production appeared due to the growth of prices for construction work and due to the increase of housing construction. The population actively invests money in the construction of housing, and this has become the driver that we lack. If mortgage crediting was launched, then it really could be a superdrive, which would provoke the growth of the Ukrainian economy. But the launch of mortgage lending is not foreseen soon, so for now all hope is for "money stashes" of Ukrainians, accumulated before.

By the way, for January-May, 2017, Ukrainians exchanged cash dollars for hryvnia by 1.1 billion more than they bought cash dollars. There is an active process of dedollarization in our country. Ukrainians get rid of dollars and buy more goods for hryvnia. As a result, the growth in retail sales for the five months of 2017 was more than 7% compared to the previous year. This is called "the propensity of the population to consume." In Ukrainian realities, it is a tendency to buy goods as quickly as possible, while prices do not rise. And the prices are growing and growing.

We were promised that inflation this year will not be higher than 8%, but it is already 13.5%, and prices continue to grow, so the propensity to buy will also grow. Trade was and remains one more driver of our economy. At the same time it is worth recalling that most of the food products in Ukraine are really Ukrainian-made, but non-food products are most often imported. Therefore, there is nothing surprising in that the import of goods to Ukraine in January-May 2017 grew by almost 30%. Exports of goods from Ukraine also increased. But less - only 26%. Therefore, the balance of foreign trade in goods is not so brilliant. And this is also our tradition.

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But what happens to us with the industry that its production amount decreased? Everything is simple. After the blockade, production of metal, coke and, in general, petrochemical products, fell sharply, and coal mining also fell. Although natural gas production grew by 3%. But this is all a trifle. In Ukraine, the food industry is showing significant growth. The production of sunflower oil is just breaking records. For January - May, 2017 sunflower oil production grew by 34%. At the same time, the export of sunflower oil also increased, and in general this product was and remains the most important export commodity of Ukraine.

The production of meat and certain types of dairy products grew, beer and soft drinks showed good growth. So the food industry actually holds back the general decline in industry. And we rely on it. Machine building and the chemical industry have grown a little. But it is, rather, the effect of the base of comparison. The bad news is that the production and supply of electricity and other forms of energy have fallen. This is a very clear indicator that the fall has affected both the formal and shadow economies. Energy is necessary for everyone, and if demand for it falls, the whole industry of Ukraine also falls.

A little bit about agriculture. The index of agricultural production in Ukraine in January-May 2017 fell by 0.9%. In fact, this is an insignificant drop. But the forecasts for the harvest this year are not encouraging. And here can really be another decrease. Now Ukraine actively sells stocks of the old harvest abroad, and the new one does not promise to be the same record. We have to think about this.

And for the end - summer begins, which means that a relative lull in the Ukrainian economy begins. It's bad that we came to the summer season with low results of work, but it's good that at least there is no significant drop. At the moment, the main thing for the economy of Ukraine and Ukrainian people is to ensure its stable state and not worsen it. Ukrainians have really learned to live in a crisis and even got used to it, but no one wants to deteriorate the situation. The fatigue of the nation is significant. It is hard for the fourth consecutive year not to live, but to survive and hope for the best. Although it is still not clear when this "best" will happen. But it will, no one argues about that.

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