The Ukrainian Economy: Overview

Current Situation Poor political environment Outset of a severe economic downturn High Inflation Sharply falling incomes Currency losing value Rising unemployment

The Economy at a Glimpse…

Before the Crisis Began… GDP (US$ bn) Real GDP growth (%) Consumer price inflation (av; %) Populatio n (m) Exports of goods (US$ m) 23,73933,43235,02438,94946,680 Imports of goods (US$ m) -23,221-29,691-36,159-44,143-54,300 Current- account balance (US$ m) 2,8916,9092,531-1,617-3,890

Importance of FDI

The Role of FDI in Ukraine Drives Economic Growth; 2006: $5 billions; 2007: $10.7 billions; 2008: $6.9 billions; EU – the source of the greatest amount; Major affected sectors: banking and financial services, insurance, consumer goods, telecoms

When the Economic Crisis Began… Higher rates for the Ukrainian dollar debt; $105 billion total external borrowing; Rising doubts for default; Lower prices of the country’s top exports – steel and chemicals; Overall contraction in world trade;

Monetary and Fiscal Policy Central Bank of Ukraine: responsible for monetary policy; No Currency Board; M2 grew 50% YoY basis by December 2008; Central Bank raised interest rates in an attempt to curb inflation; Fiscal Tightening through reining in social expenditures;

Troubles on the way… Key indicat ors Real GDP growth (%) Consum er price inflatio n (%) Consoli dated budget balance (% of G DP) Current - account balance (% of GDP) Comme rcial banks' prime rate (av; %) % Forecast Contraction in Growth; A Deep Recession in 2009; Weaker Currency:  Slump in Steel Prices and Restricted External Financing; Higher Gas Prices; Reduced Inflows of FDI; Gradual recovery expected in the future…

Sources:      Data  