GDP growth of less than 2% is degradation of Ukraine's economy

Author : Olexandr Honcharov

Source :

Ukrainian activists started the blockade of Roshen factory in Vinnytsia, therefore, we should think about the situation seriously. From my point of view, it’s interesting situation. Why is it easier to withdraw money from Ukraine to offshore, than to have foreign investors bringing money to us?
20:37, 1 November 2017

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We, perhaps, are the only country in the world where Ukrainian kleptocrats simply turn a blind eye to the withdrawal of capital. And when our foreign partners are trying to introduce direct, rather than speculative, investments into Ukraine, then our local officials begin to take them to the offices and transparently hinting at kickbacks and bribes.

Foreign investors refuse to bring money to us, especially they refuse to answer a hundred times the same questions from officials - where you transfer money from, are there documents on their origin, for what purposes do you bring such sums, and so on. The same huge problems now have those people who want to transfer money from offshore in Ukraine – they would be literally “tortured” by the NBU staff to prove that they are "white and fluffy". There is no such thing either in the US, in China, or in the countries of European Union. When investors' money comes to them, no one creates obstacles for them, investments are easily overlooked, and they work in the interests of the economies of these countries. Of course, they are followed by authorities, but it is much easier when they are circulating in national currency.

It would also be much easier for us to exercise control when all payments were made in the hryvnia. But how to explain the obvious things to these top officials?! To our deep regret, as it was before, most ministers are distinguished by incompetence and ignorance. They do not give us real economic forecasts, but immediately put us before the fact of the beginning of another and even worse scenario.

The longer they manage economic policy, the more hopelessly we lag behind qualitative economies of developed countries. On October 26 in Poltava region Volodymyr Groysman, who once again repeated the populist statement, that we can show the growth of Ukraine's GDP by 5 - 7%. And in fact, according to the results of 2016, GDP grew by 1.8% (it was planned to grow by 3%). And in 2017, we will not see its increase by 3% (the NBU worsened the forecast for GDP growth in 2017 to only 1.6%). And what worse, 2% of GDP mean the degradation of the country's economy. This amount, figuratively speaking, is just money for easy repairs of Ukrainian markets, approximately the same amount that was allocated for the repair of our roads.

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All experts are aware that if the country's economy develops less than 2% per year, then the technological structure is degrading. This is the current inertial scenario. Accordingly, having neither knowledge nor experience, Volodymyr Groysman and his team are forced to constantly choose between a bad and very bad scenario for the development of Ukrainian economy. A very bad scenario is depression, when our people, not accustomed to such a strong tention, after a while risk to face the problem of famine (the same thing happened during the Great Depression in the United States). And on this dramatic background, the second scenario with inflation looks bad, but not catastrophic.

But personally, I have the feeling that the whole colossal problem of burning public debt inflation is due to the fact that the rate of creation of debts by the Ministry of Finance outstrips their burning. And the Cabinet and the National Bank of Ukraine do not manage to adjust this speed. Therefore, on October 26, the National Bank again revised the inflation forecast for the current year. According to the updated forecast, until the end of 2017, inflation will stop at the level of 12.2% (the previous forecast was 9.1%). Now we should not be surprised that consumer prices are so rapidly growing and the living standards of Ukrainians are falling. And this is no longer an "unimportant thing". On the afternoon of October 25, depositors of insolvent banks, who so far have not been able to receive their deposits, put the first tent with a slogan calling on all affected investors to go to Maidan and support the initiative of the protesters.

Yes, everyone today needs nerves of steel and hope. In principle, there is always a strong decision and not just one, even in the constantly deteriorating situation, which is aggravated by the political crisis. Given the rhetoric of both sides, Petro Poroshenko and Mikheil Saakashvili, of course, are doing strange things and, based on what has already been heard from them, it is not difficult to understand - in the near future, the stop signal would be introduced in Ukraine for any long-term investment process. When the parties cut off their ways of retreating with each passing day, one has only to wait for the worst consequences. How else? First of all, this is understood by strategic investors.

We are not even a subject, we are just the object of this geopolitical battle. And do not forget that if there is tough pressure, then there is a tough political decision. Although the price of such a decision will be mutually difficult enough. At the same time I have no doubt that we, the society, will pay more. And one more truth is the most undesirable variant of developments for the investment business in Ukraine. It turns out that there cannot be any improvements in the economy, we must wait for political changes.

And yet, another two to three months under this authority, and we will not be able to get out of this deepest debt hole and glue the torn society together. And when in the morning all these pro-power characters begin to shout from the TV screen, I involuntarily recognize my trip to America and specifically visit the memorial in honor of US President Franklin D. Roosevelt. More precisely - the second hall, dedicated to the times of the Great Depression, where the most striking exhibit is a sculpture called "The Hunger".

I involuntarily wonder what kind of memorial our heirs would make to us after the end of this most complicated Ukrainian crisis? Maybe there will be one of these characters?

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