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Scenarios for Ukrainian economy development after presidential elections

Author : Oleg Ustenko

Our position could deteriorate or we might make a breakthrough to the world economic arena
20:30, 15 April 2019

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Conservative scenario. Ukraine is already showing economic growth (though this process is more than moderate) and, perhaps, it will show this growth in the future - even if the political class does not change anything and there will be no serious qualitative progress.

The reaction of the political class to the "stick and carrot" from international partners, which will be strengthened (perhaps strengthened) by the demands of civil society inside the country, will be reduced to the traditional "hands off me."

In this dull scenario, the ability to “beg the highest forces” for the favorable conditions on world markets will be very useful for the country's leadership.

If these conditions are favorable, we will grow; if not, we will fall. Each fall will cause additional dissatisfaction of citizens who simply pack their bags and slowly leave their beloved country. Their motivator will be extremely simple - "I want to live better."

Not everyone will succeed, but many will try. And, probably, some of them will have luck. Such labor migration will work in a minus to those who remain. Those who are the most active and courageous will leave.

Demographics will continue to deteriorate, which will invariably require ever greater redistribution of GDP through the state budget. The role of state will become more and more important.

Related: S&P Global Ratings: GDP growth in Ukraine by 2,5% in 2019


And gradually the entrepreneurial share will be evaporated. The state will fill everything. Dullness and hopelessness with a high level of predictability will become permanent companions of this scenario. People will no longer feel bad because they have become poor.

Paradoxically, the country will have not only predictability, but also relative financial stability. Exchange rate stability can be ensured by obtaining currency from labor migrants. Such a dismal scenario may be not so bad for many. And we definitely shouldn’t blame someone for having this kind of preference.

Breakthrough scenario. Ukraine "bursts" into the world information space as a very dynamic country, which despite the war makes very unconventional and unexpected steps. For example, all anti-corruption agencies are working so smoothly that no one else (either inside or outside) has any doubts that tolerance to corruption is close to zero.

State intervention in the lives of ordinary citizens begins to decline sharply - which translates into a decrease in the redistribution of GDP through the state budget, the country is undergoing judicial reform and the level of protection of private property is increasing dramatically. Trust is reborn.

The country begins to really compete for the investment resource. If it were possible to pump $ 10 billion in investments into the real sector of the economy (which is 6 times more than the volume expected this year), then there would be a serious basis for a breakthrough.

If the business climate is improving and the economy is growing, then the income of the population will quickly increase. Live is better. Migration stops. Not because it’s good at once, but because it will be better. Because hope appears! It stimulates the return of trust, it forces to give birth to children and change the demographics.

Hope from the psychological category can becomr the economic category.

Related: Ukraine's PM Groysman aims for parliamentary elections

Related: Elimination of damage from barbaric approach to Ukraine's economy will take at least 10 years

 

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