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Cliches and general statements are key skills of Ukrainian politicians

Author : Olexandr Honcharov

Source : 112 Ukraine

In 2018, any illusions about our return to the pre-crisis situation have finally disappeared
09:45, 31 August 2018

Ukrainian photo

In fact, the power drives us into an economic stagnation decade. Not only analysts of the International Monetary Fund, but also our businessmen have realized that Ukrainian business and the population need to adapt to lower growth rates. In 2018, any illusions about our return to the pre-crisis situation have finally disappeared. Besides, the main factors of the upward movement are demography and modern technologies are completely ruined.

In addition, the large-scale problems of excessive public debt are severely hampering economic growth in Ukraine. Because now both Ukrainians and companies, having huge debt loads, are not ready to invest in the new projects. Feeling uncomfortable, everyone is trying to save something for a rainy day and prepare for new shocks. However, despite the difficult social and economic situation, our Prime Minister is again going to build a self-sufficient economy, without a new economic paradigm again.

 

Related: Simplified taxation – is it beneficial or detrimental to Ukraine's economy?

August 28, Volodymyr Groysman said that the full path to the self-sufficient economy of Ukraine will take about 10 years, in particular, stressing: "For 10 years I can cope with this task, which means that every year our economy will experience positive changes." Foreign and local experts realize the hopeless backwardness of top officials in understanding the problems, most bribe-takers and kleptocrats simply have a different psychology.

For example, some of our ministers laugh at the environmental problems, and for Europe, these problems pose a huge danger. Accordingly, our officials simply ignore those problems that are of interest to the Western societies. And the worst thing is that the Prime Minister does not notice that such a complex thing is happening in the Ukrainian economy when the process of ending the recession is too low. Roughly speaking, this insignificant growth has a quality, obtained exclusively on steroids, which is hardly useful for an economic organism. Therefore, we see a sharp decline in production capacity.

Related: Ukrainians are used for economic growth in Poland, - media

And what is needed for healthy growth of the Ukrainian economy? First of all, a technological breakthrough, which will allow our enterprises to start a new cycle in the conditions of the 4th industrial revolution. Currently, we are witnessing a dead end of this creative process in our country. I doubt that Mr. Groysman sees anything different because the prime minister did not mention the new economic paradigm in his speech. Unfortunately, his assistants have written down his statement using old cliches and common slogans. Alas, this cannot become a basis for building a self-sufficient economy. Moreover, instead of direct investments, our Cabinet of Europeans and Americans receives only loans with numerous reservations, requirements, and conditions that must be given back with interest.

Simultaneously, the IMF forces Groysman to cut budget expenditures and try to somehow support the growth of the Ukrainian economy. The government has not learned to do it properly. Moreover, our country has a very bad investment image. And new lending means the growth of debts. If we continue to increase debts, we will inflate this debt or credit "bubble." And it will burst soon!

Related: Termination of trade-economic relations with Russia to cause enormous damage to Ukraine's economy

What should Ukraine do? There is China, which has just a huge amount of investment long money. While this modern Asian machine is working, while this powerful engine is working, I think, Chinese investors can strongly push for growth the world markets, as well as Ukrainian one. But for this we need to start building a modern national model of economic development, skillfully using potential points of interaction with China, the US, and the EU. We should begin with the construction of an investment hub in Kyiv. Capital, investments must be mobile.

Related: Labor force migration slows economic growth, increases price rates, - National Bank of Ukraine

It is assumed that the main objectives of the investment hub will be:

  • financing of economic development projects in the industrial and agricultural sectors of the Ukrainian economy;
  • attraction of medium and long-term investments by Ukrainian enterprises;
  • ensuring the mobilization of foreign capital;
  • attraction of long investment funds on the organized stock market and the market for joint investment;
  • organization of an international investment and exchange center in Ukraine and Ukrainian Development Corporation (UCR).

Unfortunately, we are currently experiencing not just a crisis, but a crisis with unpredictable consequences. It is better not to listen to the politicians’ fiery speeches, which have nothing in common with economic reality and social reality.

Related: Rocky ride for Russia's economy to continue

As the world financial system disintegrates and trade wars escalate, the weak and narrow markets of Ukraine will lose their sustainability.

Read the original text at 112.ua.

This column does not necessarily reflect the opinion of the editorial board or 112.International and its owners.

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